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What is a Blend Fund?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 11 September 2016
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    Conjecture Corporation
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The blend fund is a form of mutual fund that is composed of a number of different types of assets, rather than one or two types of assets. The basic idea behind a blend fund is to allow an investor to vary the diversity of his or her holdings without the need to establish several different funds.

Often referred to as hybrid funds, there are no real restrictions on the types of assets that may be included in a single blend fund. It is possible to have an eclectic mix of stocks, bonds, and money market securities as part of a blend fund. There is also no proscribed percentage of the blend fund that must be composed of any one class of assets. Thus, it is possible for a blend fund to be heavy with stocks, and contain only a few bonds and other securities, or be more or less equally allocated between the asset classes.

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Just as there is no ideal balance between the type of assets that can be part of a blend fund, there is also no recommended balance between the risk value of one asset in the fund and the rest of the assets. In fact, many examples of the blend fund will contain a diverse mixture of assets that carry a wide range of risk, from the very safe to the wildly risky. The exact composition of the blend fund rests with the individual investor, and how much risk he or she wishes to consider as part of the overall investment scheme.

Because of the diverse character of the blend fund, it is very difficult to classify the fund as being more or less risky than other forms of the mutual fund. However, there is a school of thought that tends to place the blend fund as being less risky than stock mutual funds, while still being more risky than the more simplistic bond funds.

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