What it is
A balanced fund is a type of pooled fund (like a Unit Investment Trust Fund or UITF) that tries to achieve a “balance” between growth and income.
To do this, this type of fund splits the money of its investors into equities (which have the potential to grow) and fixed-income securities (usually bonds, which deliver returns in a predictable manner over time).
The actual ratio of the equities to the fixed-income securities depends on the specific fund, but will be specified in the fund prospectus and Key Information and Investment Disclosure Statement (KIIDS). A range is usually given so the fund manager will have some leeway to adjust to market conditions.
What it means for you
A balanced fund is an investment you can consider if you want to enjoy the benefits of both growth and income.
Remember though that such funds could have lower growth potential than equity funds, and may also not provide as much income as a bond fund, but still offer good benefits by combining the two types of assets.
