What Is a Balanced Index Fund?
There are balanced funds, and there are index funds and then there are balanced index funds. A balanced index fund is a combination of a balanced fund and an index fund.Balanced FundA balanced fund is also called an asset allocation fund. It is a type of hybrid mutual fund that combines stocks, bonds and sometimes money market funds in a the same portfolio. Balanced funds are geared toward investors that are looking for a blend of growth and safety and capital appreciation.Index FundAn index fund is a type of mutual fund that holds investments that are set to match the same return as a particular market index like the Standard & Poor’s 500 Index or Dow Jones Industrial Average. Index funds require minimal to no management, and therefore are less expensive to hold than other types of mutual funds.Investment StrategyA balanced index fund seeks to combine the allocation of stocks and bonds that will allow the fund to achieve the same return as a particular market index.SignificanceTypical
