A balanced fund is a mutual fund that contains stocks, bonds, and occasionally money market funds in a single portfolio. Generally, these funds stick to a relatively fixed mix of stocks and bonds. Their holdings are balanced between equity and debt to balance growth and income. Here,🥂 we look at two of the best-known: Vanguard Star Fund Investor Shares (VGSTX) and the Fidelity Balanced Fund (FBALX).

Balanced funds are geared toward investors looking for a mixture of safety, income, and modest capital appreciation with exposure to both growth and value. By providing income through dividend-paying equities and fixed-income instruments, these investments typically have much lower volatility than those🌊 aimed only at gꦛrowth. 

Hundreds of mutual funds fit into this blended value and growth category. While many of these funds have similar profiles, a few stand out for their longevity and consistent returns.ౠ VGSTX and FBALX are🍸 each from prominent well-known fund managers.

Vanguard STAR Investor Shares (VGSTX)

VGSTX is in the moderate allocation category of the Vanguard fund family. The fund began trading in 1985, and Vanguard puts it at three on its risk/reward scale.

This mutual fund is structured as a fund of funds, which means it invests in other Vanguard mutual funds. VGSTX allocates 60% of its assets to mutual funds that invest in equities and 40% to funds that invest in bonds. VGSTX has a minimum required investment of $1,000 and a net expense ratio of 0.31%.

Its 2023 total returns were 17.11% against its benchmark, the STAR Composite Index. Morningstar called VGSTX's long-term performance "competitive," noting that the fund's annualized trailing return of 7.2% in the 10 years through year-end 2023 outpaced the Morningstar Moderate Target Risk Index and median moderate-allocation peer by 145 and 74 basis points, respectively.

VGSTX's growth equities boosted its returns. Less favorable was its greater exposure to international stocks and higher-quality bonds. Since the fund allocates its assets to other Vanguard mutual funds, investors receive the benefits of diversifying risk among several managers with different strategies.

Fidelity Balanced Fund (FBALX)

FBALX is in the moderate allocation category of the Fidelity fund family. The fund targets income and capital gains while taking on moderate risks. Like VGSTX, FBALX invests about 60% of its assets in equities and the rest in fixed-income securities, including high-yield debt securities. The fund allocates at least 25% of total assets to senior fixed-income investments, including 澳洲幸运5官方开奖结果体彩网:preferred stock.

FBALX, which began trading in 1986, has an annual expense ratio of 0.47% and no minimum investment requirement. Like VGSTX, it has done well over multiple time frames relative to its peer group. Its 2023 total returns were 21.6%. Meanwhile, its benchmarks, the S&P﷽ 500 index, and Fidelity Balanced Hybrid Composite Index, had 2023 total returns of 26.29% and 17.67%, respectively.

FBALX delivered average annual returns of 6.46%, 11.65%, and 9.57% over the previous three, five, and 10 years, respectively, making it consistently among the best performers among the hundreds of funds in its category.

Comparing VGSTX and FBALX

Like most index investments, moderate allocation funds are ideal for long-term, buy-and-hold investors. Moderate allocation funds allow investors to benefit from growth and value investing without having to time 澳洲幸运5官方开奖结果体彩网:business cycles.

Both VGSTX and FBALX have different strengths. Since VGSTX is a fund of funds, investors have diversified management styles, which FBALX does not offer. In addition, VGSTX has lower fees than FBALX. However, FBALX has done slightly better than VGSTX over the intermediate and long terms.

The Bottom Line

VGSTX and FBALX are tw♊o well-known balanced funds that mix stocks and bonds. They were both launched in the 1980s and have similar asset allocations and net asset values. FBALX has generally been the better performer and has a higher Morningstar rating, but VGSTX has less turnover and a lower annual expense ratio.