Using Blend Funds in Your Portfolio

Blend Funds
Photo: Hiroshi Watanabe/Taxi Japan/GettyImages

A blend fund is a mutual fund that combines both growth funds and value funds. A blend fund will often include other means of investing. This may include money market funds, as well. These funds diversify and so the growth and risk are difficult to predict. However, since the assets are spread over many different types of funds and stocks, it is less likely that you will take a huge hit. This means you may not make as much money as you would in a different type of investment.

As you invest, it is important to understand the different types of companies that your fund is investing in. The value funds are stocks from companies with a solid history, but that are selling at a price below their fundamental or intrinsic value. The growth funds invest in stocks of companies that have exhibited faster-than-average growth in revenue, earnings, or cash flows over the past few years, with the potential of further profit growth. These companies may not have a high dividend yields for investors as corporate profits are put back into the company for further expansion rather than paid out to shareholders.

How Should I Use Blend Funds in My Retirement Account?

When you are choosing your funds for your retirement, you will have limited choices from the different retirement investment accounts that your employer provides. In this situation, you will want to look over the different options available to you. Your human resources representative will have information about the types of investments and expected returns on the funds. Remember that in your twenties, you want the higher risk high yield investments, and as you get closer to retirement you want the lower risk low yield investments.

With your 401(k), you will only be able to choose from the options they list which may limit your choices. If you open an IRA through an investment house, you can also use blend funds as one of your options. With your IRA, you should be able to choose from a wider variety of options. If you are not sure about what you should choose, you can talk to a financial adviser to get additional advice.

Using Blend Funds in Investing Accounts

Blend funds are a good option if you are just beginning to invest. Since they help to spread the risk by investing in several different companies, you have less risk than you would with a single stock. This may make it easier for you to invest if you are nervous about entering the markets the first time. If you need additional help, it is a good idea to seek out the help of a financial planner. He can explain how to determine the returns on the funds and how to balance out the fees each year with the earnings.

Once you are more comfortable, you can try investing on your own. The key to investing wisely is to have good diversity in your overall portfolio and to hold steady when the market goes up or down. A blend fund is better than an individual stock since it spreads the risk over several different companies.

How Do I Choose the Best Blend Fund?

If you choose this type of fund, you need to look at the growth over the life of the fund. Additionally, you should feel comfortable with the asset allocation of the fund. You should look at several different blend fund options before choosing the one that is right for you.

It is also important to look at the expenses of the fund, as well as any annual fees that are associated with the fund. Many investment houses will offer blend funds. Generally, the blend funds will follow the same basic course of the stock market. It is important that you seek advice from a professional if you are uncertain about how to choose a blend fund.

You should also take into consideration the commissions you pay your financial adviser when selling or buying funds. Remember that investing in the stock market means looking at the long-term investment and try not to worry about the ups and downs of the market.

Was this page helpful?
Related Articles