5 Best Rated Balanced Funds Poised for a Surge - Mutual Fund Commentary

By creating a diversified portfolio of both stocks and bonds, balanced funds ensure that they harness the inherent strengths of both classes of instruments. Most of the competently managed funds in this category keep the proportion of assets invested in different asset classes flexible and make adjustments in keeping with prevailing market conditions. This ensures that fixed-income securities protect the portfolio from losses during a downturn while equity securities harness maximum gains from a rising market.

Below we will share with you 5 top rated balanced mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all balanced funds, investors can click here to see the complete list of funds.

Bruce Fund (BRUFX) seeks long term-capital appreciation. The fund mostly invests in domestic common stocks, convertible bonds and “zero coupon” government bonds. The fund may invest in foreign securities directly or through American Depository Receipts (“ADRs”) or Global Depository Receipts (“GDRs”). The balanced mutual fund has returned 16.1% over the last one year period.

The fund has an expense ratio of 0.7% as compared to category average of 0.93%.

Janus Balanced A (JDBAX) invests 35-65% of its assets in equity securities. The remaining part is invested in fixed-income securities and cash equivalents. A minimum of 25% of its assets is invested in fixed-income senior securities. The fund also may invest in foreign markets, including emerging economies. The balanced mutual fund has returned 8.6% over the last one year period.

As of June 2014, the fund held 421 issues with 3.32% of its assets invested in U.S. Treasury Note 0.25%.

State Farm Balanced (STFBX) seeks capital appreciation and current income. The fund invests approximately 60% of its assets in common stocks. The fund invests in companies having market capitalization of a minimum $1.5 billion at the time of purchase. At least 25% of its assets are invested in fixed income securities. These securities may include investment grade bonds that are issued by domestic companies or government and agencies. The balanced mutual fund has returned 11.1% over the last one year period.

Paul Eckley is the portfolio manager and has managed this fund since 1991.

American Funds American Balanced A (ABALX) invests via a balanced approach in various common stocks and investment grade bonds. The fund invests in US government or federal agencies-issued securities. The fund may also invest in common stocks that have a history of paying dividends and are located outside the US. The balanced mutual fund returned 9.5% over the last one year period.

The fund has an expense ratio of 0.61% as compared to category average of 0.93%.

Dodge & Cox Balanced (DODBX) seeks long-term principal and income appreciation. The fund invests in a range of equities and debt securities. It mostly invests in companies that are believed to be undervalued and have a promising outlook for long term growth. It might invest a maximum of 20% of its assets in U.S. dollar-denominated securities of non-U.S. issuers, traded not in the S&P 500. The balanced mutual fund has returned 9.8% over the last one year period.

As of September 2014, the fund held 424 issues with 2.87% of its assets invested in Hewlett-Packard Co

To view the Zacks Rank and past performance of all balanced mutual funds, investors can click here to see the complete list of funds.

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