What Is a Balanced Fund?

By Kristi Waterworth – Updated Sep 9, 2025 at 12:45 PM

Key Points

Balanced funds mix stocks and bonds, ideal for low-risk and steady returns.
They are cost-effective due to low expense ratios from minimal rebalancing.
Suitable for retirees and new investors due to their high security and low management need.

If you're looking for an investment pre-designed as a solidly diversified portfolio, a balanced fund might be right for you. A balanced fund is a type of hybrid fund that contains a lot of different investments in a single asset.

Loading paragraph...

A balance with a money bag on one side and stacked boxes of ETFs, stocks, bonds, and other assets on the other side. — Image source: Getty Images.

Loading image...

Loading paragraph...

Loading pitch...

Balanced funds are ideal for retirees looking for consistent cash flow or first-time investors just getting started in investing who can't afford to suffer a loss yet. Because balanced funds are highly diversified, they are considered remarkably secure investments for risk-averse investors.

Loading paragraph...

Loading pitch...

Loading paragraph...

ETF vs. Index Fund: What Are the Differences?

Your investment style can dictate which kind of fund is best for your portfolio.

How to Calculate Total Assets, Liabilities, and Stockholders' Equity

Assets, liabilities, and stockholders' equity are three features of a balance sheet. Here's how to determine each one.

Investing in Safe Stocks and Low-Volatility Stocks

These companies might be a good bet if you're looking for limited volatility.

What Are Share Repurchases?

Sometimes companies buy back their own stock on the open market. Why would they do this?

Loading hub_pages...

Here are a few drawbacks:

Boring portfolio. There are no two ways to put it: A balanced fund is a boring investment. It's made up of boring stocks and boring bonds -- nothing that might ever get your blood pumping, even if you were base-jumping from the Golden Gate Bridge while checking your portfolio.
Moderate returns. Growth stock and tech investors are often looking for the next explosive stock pick, and friends, this ain't it. As noted, balanced funds typically comprise safe, well-established companies that aren't doing anything but growing at a managed rate. You'll see decent returns but nothing worth bragging about.
Low input. This is also listed as an advantage, but the truth is that it's both, depending on who you are as an investor. Since you have no control over the mix once you've bought into the fund (you do get to choose the initial fund, after all, so you have some say), you also have no control over how funds are reallocated. You also can't use any kind of tax-shielding bucketing since all your stocks and bonds are lumped together into one account.

Loading paragraph...

Loading pitch...

About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

TMFMaldivesBlue

@MaldivesBlues

The Motley Fool has a disclosure policy.