Best Balanced Mutual Funds for 2025

Top Balanced Mutual Funds for Diversified and Long-Term Growth in 2025

Balanced mutual funds, also referred to as hybrid or allocation funds, contain both stocks and bonds within the same portfolio. They aim to provide more consistent returns compared to stock-only funds and outperform many pure bond products by diversifying risk across various asset types. The funds listed below have been established for a considerable period, have defined objectives, and impose reasonable fees. The data on performance and expenses is current as of the second quarter of 2025. There is no guarantee that past results will result in future gains.

1. T. Rowe Price Balanced Fund (RPBAX)

• Typical mix: ~60 % equities / 40 % bonds
• Net expense ratio: 0.60%
• 5-year annualized return: 10.88%
• Notable point: Tactical shifts around the 60/40 core have helped the fund outrun its Morningstar Moderate-Allocation peers since 2019.

2. Vanguard Wellington Fund (VWELX)

• Typical mix: 65 % equities/35% high-quality bonds
• Expense ratio: 0.25%
• 5-year return: 9.67%
• Notable point: The oldest surviving balanced fund (1929 launch) still preserves capital better than the S&P 500 in down markets.

3. Fidelity Balanced Fund (FBALX)

• Expense ratio: 0.47 %
• 5-year return: 11.22 %
• Notable point: Broad sector coverage and modest turnover (≈44 %) keep costs in check while giving managers room to add growth stocks.

4. DFA Global Allocation 60/40 Portfolio (DGSIX)

• Net expense ratio: 0.25 %
• 5-year return: 8.53 %
• Notable point: Rules-based tilts toward small-cap and value factors plus sizable emerging-market debt exposure diversify traditional U.S.-heavy mixes.

5. Schwab MarketTrack Growth Investor (SWHGX)

• Net expense ratio: 0.50 %
• 5-year return: 10.94 %
• Notable point: Asset weights (≈80 % equity/20% fixed income & cash) are rebalanced quarterly, providing a growth tilt without full equity volatility.

6. BlackRock Global Allocation Fund (Inst.; MALOX/MNIDX)

• Net expense ratio: 0.85 %
• 5-year return: 7.69 % finance.yahoo.com
• Notable point: A truly go-anywhere mandate that includes commodities, infrastructure, and credit outside the U.S. looks for both growth and protection against inflation.

7. American Funds 2030 Target Date (AAETX)

• Expense ratio: 0.66 %
• 5-year return: 7.29 %
• Notable point: Although technically a target-date series, the glide path sits near 65/35 today and becomes steadily more conservative through 2030.

8. Vanguard LifeStrategy Conservative Growth (VSCGX)

• Expense ratio: 0.12 %
• 5-year return: 4.93 %
• Notable point: A 40/60 equity-bond split plus full index implementation creates an ultra-low-cost core holding for capital preservation.

Others

• Invesco Select Risk: Moderate Investor (OAMIX): 5-year return 6.14 %, fee 0.86 %
• Columbia Dividend Income (Inst.): 5-year return 15.91 %, fee 0.65 %
• AB Tax-Managed Wealth Appreciation (ATWYX): 5-year return 12.78%

Conclusion

Balanced funds are still a simple way to get various investments without having to constantly rebalance. Low fees still matter, especially now that bond yields are low. Funds with clear mandates have done the best in the last few market shocks. When investors are looking at their options, they should think about

1. Split between stocks and bonds based on how much risk you’re willing to take.
2. Focus on both global and domestic markets to find more opportunities and spread your currency risk.
3. Cost discipline: Expense ratios over 1% eat away at compounding quickly.
4. Manager flexibility: some mandates stay the same, while others change based on the situation.

A core balanced holding, along with satellite funds or ETFs, can keep a long-term portfolio steady through different market cycles.

Frequently Asked Questions

What defines a balanced fund?

A balanced fund is a mutual fund or ETF that combines both stocks and bonds in a single portfolio. These funds typically maintain a stock allocation between 40% and 75%, aiming to deliver both capital appreciation and income generation. The goal is to provide diversification and reduce volatility compared to stock-only funds.

How are distributions from balanced funds taxed?

Distributions from balanced funds can include interest income, dividends, and capital gains. In taxable accounts, bond interest and non-qualified dividends are taxed as ordinary income, while qualified dividends may be taxed at a lower rate. Capital gains are taxed when realized. In tax-advantaged accounts like IRAs or 401(k)s, taxes are deferred until withdrawal.

Are balanced funds a good fit for retirement accounts?

Yes, balanced funds are commonly used in retirement accounts because they offer built-in diversification and require minimal ongoing management. Their automatic rebalancing helps maintain the target asset mix as investors approach retirement.

What key metrics should investors use to evaluate a balanced fund?

Important metrics include the fund’s expense ratio, 5- and 10-year risk-adjusted returns, maximum drawdown, turnover rate, and performance compared to a blended index benchmark. These indicators help assess both efficiency and consistency over time.

How often should investors review their balanced fund holdings?

Investors should review their holdings at least once per year, or sooner if there are significant changes to the fund’s asset allocation, expense ratio, or sustained underperformance. Regular reviews help ensure the fund still aligns with overall investment goals.

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Reviewed and edited by Albert Fang.

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Article Title: Best Balanced Mutual Funds for 2025

https://fangwallet.com/2025/06/23/best-balanced-mutual-funds-for-2025/

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