The volatility in the U.S. stock market continues even after December 2022 consumer price index (CPI) report reflected a 0.1% dip in prices from November. Prices were still 6.5% higher than the prior year and in line with the street expectation. The Dow, the S&P 500 and the Nasdaq posted a negative return of 5.33%, 14.5% and 25.70%, respectively, over the past year.
Though the current CPI data suggests a weakening inflation trend, the Federal Reserves’ chairman Jerome Powell continues to stress on a stable inflation rate, which could lead the central bank to remain hawkish even if it’s not popular. All eyes are now on the Fed’s January meeting with the expectation of slower interest rate hikes. However, economists are predicting that the Fed’s interest policy could trigger a recession.
The global economy is also showing signs of slowing down due to a high inflation situation in other countries and the energy crisis due to geopolitical tensions. High energy costs due to the ongoing war in Ukraine have aggravated one of the worst energy crises in recent decades, causing a global supply-chain disturbance. China’s widespread COVID-control policy has taken a toll on its growth.
Keeping the current situation in mind, it would be wise to invest in balanced funds. A balanced fund maintains exposure in both equity and fixed-income securities. The proportion of equity and fixed-income investments in these funds may also vary in response to market conditions. While managers may increase the share of fixed-income securities during a downturn to avoid losses, the share of equity securities may be increased in a bullish market. Also, these mutual funds are believed to provide greater returns than pure, fixed-income investments while maintaining a low volatility level.
Thus, from an investment standpoint, we have highlighted five balanced mutual funds that are expected to give a positive return in such uncertain times. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
These funds, by the way, have given impressive 3-year and 5-year returns as well, boast a Zacks Mutual Fund Rank #1 (Strong Buy), offer a minimum initial investment within $5,000, and carry a low expense ratio compared to the category average.
Brown Advisory Flexible Equity Fund BIAFX invests most of its assets along with borrowings, if any, in a diversified portfolio of equity securities of medium and large-capitalization companies that its advisors believe are undervalued and have strong, or improving, long-term business characteristics. BIAFX advisors may also invest a small portion of their assets in foreign issues, including emerging markets.
Maneesh Bajaj has been the lead manager of BIAFX since Oct 31, 2017, and most of the fund’s holdings were in sectors like technology (37.35%), finance (25.76%), and retail trade (9.15%) as of Nov 30, 2022.
BIAFX’s 3-year and 5-year returns are 8.8% and 10.8%, respectively. The annual expense ratio of 0.68% is lower than the category average of 0.99%. BIAFX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
State Farm Balanced Fund STFBX invests most of its net assets in equity securities of preferably large and medium-cap companies. STFBX advisors consider large and medium-cap companies as defined by S&P Dow Jones Indices at the time of investment.
David M. Alongi has been the lead manager of STFBX since Mar 31, 2021, and most of the fund’s holdings were in sectors like technology (15.94%), non-durable (14.0%), and industry cyclical (13.93%) as of Nov 30, 2022.
STFBX’s 3-year and 5-year returns are 8.5% and 8.2%, respectively. The annual expense ratio is 0.14% compared to the category average of 0.84%. STFBX has a Zacks Mutual Fund Rank #1.
Fidelity Balanced Fund FBAKX invests most of its net assets in a portfolio consisting of equity securities, bonds, and other debt securities, including lower-quality debt securities and junk bonds. FBAKX advisors also invest a small portion of their assets in fixed-income senior securities.
Steven Kaye has been the lead manager of FBAKX since Sep 30, 2008, and most of the fund’s holdings were in sectors like finance (44.09%), technology (22.8%) and retail trade (7.71%) as of Nov 30, 2022.
FBAKX’s 3-year and 5-year returns are 8.3% and 8.3%, respectively. The annual expense ratio is 0.42% compared to the category average of 0.84%. FBAKX has a Zacks Mutual Fund Rank #1.
Dodge & Cox Balanced Fund DODBX seeks long-term growth capital appreciation along with current income by investing most of its net assets in a diversified portfolio of equity and debt securities in various proportions. DODBX advisors may also invest a small portion of their net assets in U.S. dollar-denominated equity or debt securities of foreign issuers that are traded in the United States but not part of the S&P 500 Index.
David C. Hoeft has been the lead manager of DODBX since Jan 1, 2002, and most of the fund’s holdings were in sectors like other (34.26), finance (18.64%) and technology (14.86%) as of Nov 30, 2022.
DODBX’s 3-year and 5-year returns are 7.8% and 7.2, respectively. The annual expense ratio is 0.52% compared to the category average of 0.84%. DODBX has a Zacks Mutual Fund Rank #1.
Hartford Balanced HLS Fund HADAX invests most of its net assets in equity securities of domestic and foreign companies, preferably with large market capitalization similar to those listed on the S&P 500 Index. HADAX advisors also invest the fund’s net assets in debt securities and cash instruments along with equity in various proportions depending upon the market conditions.
Adam H. Illfelder has been the lead manager of HADAX since May 1, 2017, and most of the fund’s holdings were in sectors like other (35.33), technology (19.53%), and finance (15.7%) as of Nov 30, 2022.
HADAX’s 3-year and 5-year returns are 7.0% and 7.1, respectively. The annual expense ratio is 0.62% compared to the category average of 0.84%. HADAX has a Zacks Mutual Fund Rank #1.
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