What is the primary objective of a balanced mutual fund?

The primary objective of a balanced mutual fund is to balance stocks and bonds within its portfolio. This investment strategy aims to achieve a middle ground between growth and income, allowing investors to benefit from the capital appreciation associated with stocks while also providing some degree of stability and income through bonds. The balanced approach helps manage risk by diversifying across asset classes, which can reduce the overall volatility of the portfolio.

In the context of a balanced mutual fund, having exposure to both equities and fixed-income securities allows for potential growth while also cushioning against market downturns common with stock investments. This combination is particularly appealing to investors looking for a moderate risk profile, as it can provide a more stable return over time compared to a fund that focuses solely on one asset class.

The other options focus on either an extreme emphasis on one type of investment (like stocks, bonds, or real estate) or the complete exclusion of an asset class, which does not align with the objective of a balanced mutual fund. Therefore, the approach of balancing stocks and bonds effectively encapsulates the core goal of such funds.