By creating a diversified portfolio of both stocks and bonds, balanced funds ensure that they harness the inherent strengths of both classes of instruments. Most of the competently managed funds in this category keep the proportion of assets invested in different asset classes flexible and make adjustments in keeping with prevailing market conditions. This ensures that fixed-income securities protect the portfolio from losses during a downturn while equity securities harness maximum gains from a rising market.

Below we will share with you 5 top rated balanced mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all balanced funds, investors can click here to see the complete list of funds.

Transamerica Multi-Managed Balanced A (IBALX) seeks total return. The fund primarily invests in a diversified portfolio of stocks, bonds and money market instruments. It fulfills its objective by investing in common stocks of closed-end funds that are chosen by Aegon USA Investment Management, LLC. The balanced mutual fund has returned 11.5% over the last one year period.

As of September 2014, the fund held 666 issues with 2% of its assets invested in Apple Inc

Lord Abbett Multi-Asset Growth A (LWSAX) invests in mutual funds that are managed by Lord, Abbett & Co. LLC. The underlying funds invest in domestic equity securities and fixed income instruments and in foreign securities. The underlying funds invests in both growth and value stocks. The balanced mutual fund returned 9.3% over the last one year period.

Robert I. Gerber is the portfolio manager and has managed this fund since 2005.

Janus Balanced A (JDBAX) seeks capital appreciation over the long run. The fund invests 35-65% of its assets in equities. The rest of the assets are invested in fixed-income securities and cash equivalents. A minimum of 25% of its assets are invested in fixed-income senior securities. The fund also may invest in foreign markets, including emerging economies. The balanced mutual fund has returned 9.9% over the last one year period.

As of September 2014, the fund held 441 issues with 2.47% of its assets invested in LyondellBasell Industries NV

American Century Investments Balanced Investor (TWBIX) allocates 60% of the assets in domestic large-cap firms while the remaining portion is invested in bonds and other fixed-income securities such as diversified high-medium-grade non-money market debt securities. The balanced mutual fund has returned 10.2% over the last one year period.

The fund has an expense ratio of 0.9% as compared to category average of 0.93%.

Jamestown Balanced (JAMBX) seeks long term capital appreciation and current income. The fund mostly invests in domestic equities and fixed income securities. The fund invests at least 25% to a maximum 75% of its assets among equity and fixed income securities. The average maturity period for the fixed income securities varies from 3 to 12 years. The balanced mutual fund has returned 9.7% over the last one year period.

As of September 2014, the fund held 95 issues with 3.12% of its assets invested in FHLMC 5.25%

To view the Zacks Rank and past performance of all balanced mutual funds, investors can click here to see the complete list of funds.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank in our Mutual Fund Center.

Read the analyst report on IBALX

Read the analyst report on LWSAX

Read the analyst report on JDBAX

Read the analyst report on TWBIX

Read the analyst report on JAMBX


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