4 Replies to “Whats the difference between a 100% “Equity Based” Mutual Fund & a “Balanced” Mutual Fund?”

  1. “Balanced” implies that there are debt securities as well as equities. Over the long haul, equities will have a higher return, but if you need to draw funds at a time when equity markets are depressed, having some debt instruments in one’s pocket can be useful.

  2. 100% equity funds means all the investment is invested in equity shares….where as balanced mutul fund includes both equity shares and other financial instruments….equity based gives better returns but risk is more….

  3. Balanced funds are about half fixed income and half stocks. Basically its a fixed asset allocation fund. They balance risk, income and capital appreciation. Over the long term you will do better if you have some percentage of both fixed income and equity as your time horizon becomes shorter.

  4. A 100% equity mutual fund invests entirely in equities while a balanced mutual fund invests in equities as well as bonds. The most common asset allocation for a balanced mutual fund is 60-65% in equities and the remainder in fixed income.

    Balanced mutual funds are generally safer but also have lower returns than 100% equity mutual funds. A typical return for a balanced mutual fund might be 7-10% per year while 100% equity mutual funds might return 9-12% per year. The equity component of most balanced mutual funds is invested in large-cap stocks.

    I hope this helps.

    Michael A. Weiss, CFA
    The Editor
    The Mutual Fund Investor

Leave a Reply

Your email address will not be published. Required fields are marked *

7 + 4 =