Blend Fund
What It Is:
A blend fund, also called a hybrid fund, is a mutual fund composed of a combination of securities from different asset classes designed to increase diversification with just a single fund.
How It Works/Example:
A blend fund differs from a traditional fund, which usually focus exclusively on one asset class such as value stocks or highly rated domestic bonds. Instead, a blend fund will own investments across several asset classes, providing more diversification in one fund than traditionally available.
For example, a blend mutual fund might own 25% value stocks, 25% growth stocks, and 50% high-quality bonds. An investor purchasing this fund will thus gain exposure to growth and value stocks, as well as bonds, without having to purchase three different funds.
Why It Matters:
Blend funds offer a way for investors to easily increase their exposure across several asset classes without having to purchase and track several different funds.
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Cached on February 8, 2012, 1:39 pm