3 Great Balanced Funds

Jason Kephart: Investing is hard. Is inflation going to chill out? Are we in another tech bubble? What the heck is going on in emerging-markets stocks? If you’d rather spend your free time doing something fun instead of pondering the mysteries of the financial markets, then a balanced fund could be the right choice for you. If you’re investing for the long term, balanced funds, like the classic 60/40, can be your whole portfolio or the foundation you build around. Here are three of our favorites:

3 Great Balanced Funds

1. Vanguard Balanced Index VBINX
2. T. Rowe Price Balanced RPBAX
3. BlackRock Global Allocation MALOX

First is Vanguard Balanced Index. It’s the quintessential 60/40 portfolio, which is alive and well despite all the haters. The 60/40 portfolio is like grandma’s cooking: It goes out of style but never for long. This fund invests 60% of its money in a portfolio that mimics Vanguard US Total Stock Market and 40% in one that mimics Vanguard US Total Bond Market. The fund took its lumps in 2022 as the Fed aggressively hiked interest rates to combat inflation, causing stocks and bonds to drop together. But it’s mostly regained all its losses through mid-February and going forward the higher interest rates should mean the bonds deliver better returns going forward than they have the last decade. The fund’s US-only focus could be a drawback if international stocks and bonds outperform, but its rock-bottom fees of only $18 for every $10,000 invested give it an enduring edge versus other peers.

If you prefer your investments to venture outside the US, then T. Rowe Price Balanced is another good option. It tends to invest about 20% of its portfolio in international stocks. This fund also uses more diverse asset classes like real assets and high-yield bonds that aren’t found in Vanguard’s straightforward approach. That should help the fund hold up well during a variety of market conditions. It also distinguishes itself by targeting a 65% allocation to stocks—just enough to keep things spicy. A handful of T. Rowe’s well-regarded active stock and bond managers provide the building blocks, like the managers behind T. Rowe Price Blue Chip Growth TRBCX, T. Rowe Price Overseas Stock TROSX, and T. Rowe Price High Yield PRHYX. Its lead managers are no slouches either, and we consider T. Rowe’s multi-asset team one of the best.

Our final pick is BlackRock Global Allocation. As its name implies, this fund treats the world as its oyster while anchoring itself to a 60/40 benchmark of global stocks and bonds. It’s managed by Rick Rieder, BlackRock’s’ CIO of fixed income and winner of Morningstar’s 2023 Outstanding Portfolio Manager award. He’s supported by a well-rounded group of fundamental and quantitative veterans and analysts. Although Rieder is best known as a fixed-income manager, this portfolio allows for the full expression of his views on the world economy and makes the best use of the Vegas-style buffet of research and data he and his team consume to inform their views. His characteristic “Rieder-iffic” approach to managing risks also plays a key role here and should give investors comfort that the meticulous management will keep them on the right path.

Watch Can the 60/40 Portfolio Win in 2024? for more from Jason Kephart.