Generally, balanced funds stick to a relatively fixed proportion of stocks and bonds but may also have a money fund component. Their objective is typically a mix of income and capital appreciation, explains Cynthia Andrade, contributing editor to MoneyLetter.
On the equity side, the portfolio at Vanguard Balanced Index Admiral Shares (VBIAX) mimics the CRSP U.S. Total Stock Market Index, which includes 3,600 stocks ranging from micro-caps to the largest stocks traded on the New York Stock Exchange and the NASDAQ.
The fund contains a sampling of the very smallest, but replicates the rest, holding 3,500 securities in total. Technology is the largest sector weighing at 20.4% of assets, followed by financials (19.4%).
Consumer services, industrials, and healthcare follow, all between 13%-14% of assets. This fund’s portfolio differs from many others in the asset allocation category in that it does not hold any foreign securities.
The fixed income portion of the fund tracks the Bloomberg Barclays U.S. Aggregate Float Adjusted Bond Index, which represents a wide spectrum of taxable investment-grade bonds.
It includes government, corporate, and international dollar-denominated bonds with maturities of more than one year. The fund’s bond holdings are selected through a statistical sampling process.
The fund maintains an average maturity and credit profile in line with the index. About 64% of assets are invested in US Government securities, with most of the remainder in the A/BBB range. Here, the fund differs from some peers in that it does not hold high-yield debt.
