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Ella Williams

Investment Dictionary


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Balanced Fund

 

A balanced fund is a mutual (investment) fund that invests in different asset classes: stocks, bonds and money market investments according to the fund’s investment strategy. 

 

It may seem that a balanced fund is good investment for an average investor but it would be true only for the laziest (or very small) investors. The reason of it is that every investor can buy several different funds that represent pure different asset classes. In that case investor would chose exact asset allocation that matches his personal characteristics and risk tolerance the best.

 

Most of the balanced funds are actively managed funds that doesn’t not necessary mean fund manager will use a lot of market timing to change proportions between bonds and stocks because such actions are quiet risky and it is believed that is almost impossible to create additional value in such actions over long term.

 

 






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