Using Balanced Funds To Invest In Stocks And Bonds Simultaneously

For investors with an intermediate-term focus, a balanced fund may be a vehicle to help meet their objectives. As the name suggests, a balanced fund keeps the stock-bond allocation fairly stable. A typical allocation is 60 percent stocks and 40 percent bonds, although some balanced funds maintain a larger position in equities.

For investors who like the convenience of having a manager do the allocating, balanced funds can be the right choice. Some funds in the category can be rather pricey, so investors should do some homework in determining expense ratios before they buy.

Dodge & Cox

The Dodge & Cox Balanced Fund (MUTF: DODBX) invests in companies that are out of favor, but have upside potential. Financial services, technology and healthcare are the fund's top sectors.

It seeks a benchmark allocation of 60 percent stocks and 40 percent bonds, but those allocations are not mandated. Typical investments are large-cap stocks, corporate bonds and mortgage-backed securities.

The fund's one-year return is 7.08 percent.

Mairs & Power

The Mairs & Power Balanced Fund Investors Class (MUTF: MAPOX) tilts toward income stocks, meaning the equity allocations tend to be in well known, large-cap “blue chips.” The managers are also seeking securities with an average yield that's 25 percent greater than the average yield of S&P 500 stocks. To help achieve that goal, the fund will invest in bonds with ratings below investment grade.

Top sectors represented are industrials, financial services and healthcare.

The fund's one-year total return is 8.9 percent.

Columbia

The Columbia Balanced Fund Class Z (MUTF: CBALX) allocates among equity and debt based on its analysis of the risks and returns of each asset class. It typically invests between 35 percent and 65 percent of net assets in each asset class.

Top sector holdings are financial services, technology and healthcare. Its total return on a one-year basis is 12.4 percent.