Summary of Balanced Mutual Funds

A balanced mutual fund is a fund that invests in stocks, bonds, and cash (and cash equivalents). The management strategy of a balanced fund is based on how it allocates its investments among these three basic asset classes. While some balanced funds have set guidelines for how much can be invested in a given class, asset allocation funds can re-allocate themselves in any ratios their managers want to achieve their goals—a feature that can affect their volatility.