Balanced Funds

Balanced fund are considered to have higher risk and greater levels of volatility when compared with mortgage funds and bond funds because they typically combine stocks with short-, medium-, and long-term bonds of federal and provincial governments. Stocks provide the potential for growth through the increase in the value of the stocks held in the fund while the bonds in the fund provide income via their coupon payments that yield interest income to the investor.

Balanced funds run the gamut of risk: it all depends on the investment objective of the fund. Regardless of whether an individual is a conservative investor or a higher risk investor – it is the investor’s responsibility to understand how balanced funds invest, and whether those investments meet an individual’s personal risk-comfort level.  Balanced funds can differ greatly from one mutual fund company to another and their investment objectives, volatility and risk levels can differ significantly.

Within the balanced fund category of mutual funds, there is a categorization by fund as either balanced income or balanced equity in most cases. Balanced income slants more towards bond holdings and balanced equity more towards stocks.  In addition, it is important to note that there are Canadian Balanced Funds in addition to Global Balanced Funds. 

All details of a mutual fund must be provided to you in a prospectus before you commit to purchase or invest. It is an investor’s responsibility to read the prospectus, and all its details and understand fully what it is that you are investing in.

Mutual funds in Canada are highly regulated, and performance data is easy to acquire. Mutual funds are issued by prospectus and it is important to note that returns are not guaranteed and principal is not guaranteed.  Unit values fluctuate in value and investors may pay commissions to buy and/or redeem and sell mutual funds.  Investors should always read the prospectus prior to making an investment into a mutual fund.

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