Do you know that there is a cross between an equities fund and bond fund? It’s called balanced fund. It is invested in both, so it actually gives you the best of both worlds.
Find out why investing in a balanced fund may be suitable for you.
What is a balanced fund?
A balanced fund is a hybrid of an equities fund and bond fund. Its assets are a mix of stocks and debt instruments such as bonds or money market securities. In effect, it combines the high risk/high growth potential associated with stocks and the low risk/modest earnings from fixed income instruments.
Here is a portfolio of a balanced fund.
As you can see, over half of its allocation is into equities and a little less than the other half is into government-issued bonds, time deposits and money market.
What is the goal of a balanced fund?
A balanced fund seems to occupy the space between the aggressive equities and conservative fixed income assets. Its interesting composition makes it necessary to be a very actively managed fund. In turn, this is reflected on its fees.
Consequently, its goal is two-fold. It tries to match or exceed the stock index—which is composed of blue chip stocks, the top 30 Philippine corporations—as well as the 91- or 100-day return of Philippine government bills.
It is important to note though that some funds may not have exactly the same goal. Nonetheless, they may share the common characteristic of comparing its returns to some benchmark in stocks and fixed income.
Who sells balanced funds
Just like any other investment fund, you can actually invest through the following companies:
It’s sort of unusual that there aren’t any balanced fund available under Personal Equity and Retirement Account (PERA) just yet. Maybe in the future, it’s going to be offered to give the investing public more choices.
List of balanced funds in the Philippines
Below is the list of balanced funds excluding those that are available through VUL.
| Name | Type |
|---|---|
| AB CAPITAL BALANCED FUND | UITF |
| ATRAM Dynamic Allocation Fund, Inc. | Mutual fund |
| ATRAM Global Multi-Asset Income Feeder Fund (PHP Unit Class) | UITF |
| ATRAM Philippine Balanced Fund, Inc. | Mutual fund |
| ATRAM US Multi-Asset Income Feeder Fund (PHP Unit Class) | UITF |
| BDO PESO BALANCED FUND | UITF |
| BEST BALANCED FUND | UITF |
| BPI Balanced Fund | UITF |
| BPI Bayanihan Balanced Fund | UITF |
| CHINA BANK BALANCED FUND | UITF |
| Cocolife Dollar Fund Builder, Inc. | Mutual fund |
| CTBC Bank – ATRAM Philippine Balanced Feeder Fund | UITF |
| First Metro Save and Learn Balanced Fund Inc. | Mutual fund |
| Grepalife Balanced Fund Corporation | Mutual fund |
| LANDBANK Growth Fund | UITF |
| Manulife Global Preferred Income Feeder Fund (PHP Unhedged Class A) | UITF |
| Metro Aspire Balanced Feeder Fund | UITF |
| Metro Balanced Fund | UITF |
| NCM Mutual Fund of the Phils., Inc. | Mutual fund |
| Odyssey Diversified Balanced Fund | UITF |
| Odyssey Diversified Capital Fund | UITF |
| PAMI Asia Balanced Fund, Inc. | Mutual fund |
| PAMI Horizon Fund, Inc. | Mutual fund |
| Philam Fund, Inc. | Mutual fund |
| PNB BALANCED FUND (formerly PNB PRESTIGE BALANCED FUND) | UITF |
| RBank Balanced Fund | UITF |
| RBank Tax-Exempt Retirement Fund (A Balanced UITF) | UITF |
| RIZAL BALANCED FUND | UITF |
| SB PESO ASSET VARIETY FUND | UITF |
| Solidaritas Fund, Inc. | Mutual fund |
| Sterling Balanced Fund | UITF |
| Sun Life of Canada Prosperity Balanced Fund, Inc. | Mutual fund |
| Sun Life Prosperity Dollar Advantage Fund, Inc. | Mutual fund |
| Sun Life Prosperity Dollar Wellspring Fund, Inc. | Mutual fund |
| Sun Life Prosperity Dynamic Fund, Inc. | Mutual fund |
| UCPB Balanced Fund (Formerly United Balanced Fund) | UITF |
| UnionBank Capital Accumulation Global Fund of Funds Peso Class Portfolio | UITF |
| UnionBank Peso Balanced Portfolio | UITF |
Advantages of balanced fund
Best of both worlds
By investing in a balanced fund, you get to derive the benefits from stocks and fixed income. You get both the earning from these two different asset classes.
Moderate risk
Due to its composition, its risks can be described as moderate. While equities can be volatile, the fixed income part of its allocation provides the relatively safer cushion.
Diversified portfolio
You are invested to a portfolio that is diversified. You are exposed to both equities and relatively risk-free bonds and money market securities. This means that losses from a volatile stock market may possibly be softened by the its fixed income assets.
Disadvantages of a balanced fund
Moderate returns
The allocation is divided in two different securities that have opposite risk-return profiles. The consequence is that you may not be able to fully take advantage in maximizing your returns in a rising stock market.
Higher fees
Because the fund manager has to handle different asset classes, the fees may be higher compared to passively managed and low-cost index funds.
Best balanced funds in the Philippines
Here’s the list of the top balanced funds arranged from highest to lowest returns for the year 2019. See top UITF and best mutual funds articles respectively for the complete list. Again, past performance does not guarantee future returns.
| Type | Bank | Fund Name | ROI |
|---|---|---|---|
| UITF | BPI | Odyssey Diversified Capital Fund | 12.66% |
| UITF | BPI | Odyssey Diversified Balanced Fund | 10.60% |
| UITF | Union Bank | UnionBank Peso Balanced Portfolio | 9.76% |
| UITF | Robinsons Bank | RBank Tax-Exempt Retirement Fund | 9.55% |
| UITF | Security Bank | SB PESO ASSET VARIETY FUND | 9.51% |
| UITF | BPI | BPI Bayanihan Balanced Fund | 8.13% |
| UITF | China Bank | CHINA BANK BALANCED FUND | 7.83% |
| Mutual fund | Philam | PAMI Horizon Fund, Inc. | 7.21% |
| UITF | RCBC | RIZAL BALANCED FUND | 6.73% |
| Mutual fund | Philam | Philam Fund, Inc. | 6.61% |
| UITF | Metrobank | Metro Balanced Fund | 6.59% |
| UITF | BDO | BDO PESO BALANCED FUND | 6.54% |
| UITF | Metrobank | Metro Aspire Balanced Feeder Fund | 6.39% |
| UITF | Land Bank | LANDBANK Growth Fund | 6.01% |
| UITF | UCPB | UCPB Balanced Fund | 5.82% |
| Mutual fund | Sun Life | Sun Life of Canada Prosperity Balanced Fund, Inc. | 5.81% |
| Mutual fund | Sun Life | Sun Life Prosperity Dynamic Fund, Inc. | 5.77% |
| Mutual fund | FAMI | First Metro Save and Learn Balanced Fund Inc. | 3.46% |
| UITF | BPI | BPI Balanced Fund | 3.30% |
| UITF | PNB | PNB BALANCED FUND | 2.78% |
| UITF | AB Capital | AB CAPITAL BALANCED FUND | 2.77% |
| Mutual fund | ALFM | Solidaritas Fund, Inc. | 2.58% |
| Mutual fund | Grepalife | Grepalife Balanced Fund Corporation | 1.92% |
| Mutual fund | ATRAM | ATRAM Philippine Balanced Fund, Inc. | -1.27% |
| UITF | Robinsons Bank | RBank Balanced Fund | -2.54% |
| UITF | PBCOM | BEST BALANCED FUND | -3.05% |
| Mutual fund | ATRAM | ATRAM Dynamic Allocation Fund, Inc. | -5.36% |
Fees of balanced funds
The table below contains details of balanced funds:
- Initial stands for the minimum required starting capital. This is the amount that the company requires for you to start investing.
- Add means the least amount that you can add to your investment.
- Sales load is the fee that the investment fund company charges every time that you invest. It may be collected either upfront or when you decide to get your money back.
- Hold describes the period of time that you’re expected to keep your investment.
- Exit fee stands for the charge collected when you withdrawing your money before the holding period is up.
- Fee is the management fee which is used to pay for the operation of the fund.
| Name | Type | Initial | Add | Sales load | Hold | Exit | Fee |
|---|---|---|---|---|---|---|---|
| ATRAM Dynamic Allocation Fund, Inc. | Mutual fund | 50 | 50 | 5% | 90 days | 1.12% | 1.75% |
| ATRAM Philippine Balanced Fund, Inc. | Mutual fund | 50 | 50 | 5% | 90 days | 1.12% | 1.75% |
| First Metro Save and Learn Balanced Fund Inc. | Mutual fund | 5,000 | 1,000 | 2% | 6 months | 1% | 1.88% |
| Grepalife Balanced Fund Corporation | Mutual fund | 5,000 | 500 | 2% | 1 year | 2% | 1.88% |
| NCM Mutual Fund of the Phils., Inc. | Mutual fund | 100,000 | 10,000 | 3.36% | 6 months | 1% | 1.80% |
| PAMI Horizon Fund, Inc. | Mutual fund | 5,000 | 1,000 | 2.80% | 6 months | 1% | 1.80% |
| Philam Fund, Inc. | Mutual fund | 1,000 | 500 | 3% | 6 months | 1% | 2% |
| Solidaritas Fund, Inc. | Mutual fund | 5,000 | 1,000 | 1.50% | 6 months | 1% | 2% |
| Sun Life of Canada Prosperity Balanced Fund, Inc. | Mutual fund | 1,000 | 1,000 | 2% | None | None | 2% |
| Sun Life Prosperity Achiever Fund 2028, Inc. | Mutual fund | 1,000 | 1,000 | None | 5 years | 5% | undefined |
| Sun Life Prosperity Achiever Fund 2038, Inc. | Mutual fund | 1,000 | 1,000 | None | 5 years | 5% | undefined |
| Sun Life Prosperity Achiever Fund 2048, Inc. | Mutual fund | 1,000 | 1,000 | None | 5 years | 5% | undefined |
| Sun Life Prosperity Dynamic Fund, Inc. | Mutual fund | 1,000 | 1,000 | 2% | 30 days | 1% | 2% |
| AB CAPITAL BALANCED FUND | UITF | 25,000 | 10,000 | 30 calendar | 1.00% of the Principal | 1.25% PA | |
| ATRAM Global Multi-Asset Income Feeder Fund (PHP Unit Class) | UITF | 1,000 | 1,000 | 0 calendar | none | 0.95% | |
| ATRAM US Multi-Asset Income Feeder Fund (PHP Unit Class) | UITF | 1,000 | 1,000 | 0 calendar | none | 0.95% | |
| BDO PESO BALANCED FUND | UITF | 10,000 | 10,000 | 30 calendar | 0.50% of the Original Participation Amount | 1.00% p.a. | |
| BPI Balanced Fund | UITF | 10,000 | 1,000 | 0 calendar | None | 1.50% p.a. | |
| Odyssey Diversified Capital Fund | UITF | 10,000 | 5,000 | 0 calendar | None | 1.50% p.a. | |
| Odyssey Diversified Balanced Fund | UITF | 10,000 | 5,000 | 0 calendar | None | 1.50% p.a. | |
| BPI Bayanihan Balanced Fund | UITF | 10,000 | 1,000 | 0 calendar | None | 0.30% p.a. | |
| CHINA BANK BALANCED FUND | UITF | 5,000 | 1,000 | 30 calendar | 1.0% of the amount redeemed | 1.0% per annum based on the Net Asset Value (NAV) of the Fund before trust fee for the day | |
| CTBC Bank – ATRAM Philippine Balanced Feeder Fund | UITF | 10,000 | 10,000 | 30 calendar | 0.50% | 1.00% | |
| LANDBANK Growth Fund | UITF | 5,000 | 1,000 | 30 calendar | 25% of net earnings (P500 minimum) | 1.25% | |
| Manulife Global Preferred Income Feeder Fund (PHP Unhedged Class A) | UITF | 50,000 | 5,000 | 30 calendar | 1.00% as a % of the amount withdrawn | 1.75% | |
| Metro Balanced Fund | UITF | 25,000 | 25,000 | 30 calendar | 50% of income on redeemed amount | 2.00% | |
| Metro Aspire Balanced Feeder Fund | UITF | 5,000 | 1,000 | 0 calendar | None | None | |
| BEST BALANCED FUND | UITF | 10,000 | 10,000 | 90 calendar | 0.25% of redemption value | 1.5% p.a. | |
| PNB BALANCED FUND (formerly PNB PRESTIGE BALANCED FUND) | UITF | 10,000 | 10,000 | 30 calendar | 50% of Income Earned | 1.25% p.a. | |
| RIZAL BALANCED FUND | UITF | 5,000 | 1,000 | 30 calendar | 0.25% of redemption proceeds | 1% | |
| RBank Balanced Fund | UITF | 50,000 | 10,000 | 90 calendar | 1/2% of redemption amount or P500.00 whichever is higher | 1.50% | |
| RBank Tax-Exempt Retirement Fund (A Balanced UITF) | UITF | 1,000,000 | 1,000 | 0 calendar | N/A | 0.15% | |
| SB PESO ASSET VARIETY FUND | UITF | 10,000 | 5,000 | 0 calendar | N/A | 1.5% | |
| Sterling Balanced Fund | UITF | 10,000 | 5,000 | 30 calendar | 0.50% of the net proceeds | 1.25% | |
| UnionBank Peso Balanced Portfolio | UITF | 100,000 | 0 | 90 calendar | 0.25% or Php 500 whichever is higher | 2% on equity, 1% on fixed income, 0.25% of pooled funds; 0.53% per quarter | |
| UnionBank Capital Accumulation Global Fund of Funds Peso Class Portfolio | UITF | 5,000,000 | 5,000 | 90 calendar | Php 500 or 0.25%, whichever is higher | 1.5% per annum | |
| UCPB Balanced Fund | UITF | 1,000 | 1,000 | 30 calendar | 5% | 1.75% |
Is balanced fund right for you?
A balanced fund may be right for people who would want to avoid being completely invested in equities and therefore being exposed to its risks. The volatility of stocks may be dampened by the comparatively safer risk profile provided by fixed income assets.
Also, it can also be appropriate for people who are saving up for a financial goal a very long term, such as retirement. As we age, our risk appetite may change from being aggressive in our younger years to becoming conservative when we get older. A balanced fund can be a good option to park your savings as your risk appetite changes.
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