What is a Blend Fund?
In equity investing, there are two main management styles growth and value. While both offer a long-term approach to capital appreciation, they differ in how they pursue that goal. Blend investing combines both approaches. What type of stocks do blend managers look for? Blend managers seek growth stocks, value stocks or stocks that exhibit characteristics of both. Growth investing looks for companies with greater growth potential than the overall market. Value investing is bargain hunting looking for strong, inexpensive companies that offer positive growth potential. Why include blend investing in my portfolio? Because it is difficult to determine which style the market will favor, a blend fund may be a smart core equity strategy. A blend fund can emphasize whichever style the manager believes is performing or will perform better. Of course, there is no guarantee that a blend-style portfolio will outperform or be less volatile than a value- or growth-style fund.
The blend fund is a form of mutual fund that is composed of a number of different types of assets, rather than one or two types of assets. The basic idea behind a blend fund is to allow an investor to vary the diversity of his or her holdings without the need to establish several different funds. Often referred to as hybrid funds, there are no real restrictions on the types of assets that may be included in a single blend fund. It is possible to have an eclectic mix of stocks, bonds, and money market securities as part of a blend fund. There is also no proscribed percentage of the blend fund that must be composed of any one class of assets. Thus, it is possible for a blend fund to be heavy with stocks, and contain only a few bonds and other securities, or be more or less equally allocated between the asset classes. Just as there is no ideal balance between the type of assets that can be part of a blend fund, there is also no recommended balance between the risk value of one asset in th
