What is a Blend Fund?
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 Does a Blend Fund Work?
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 Does a Blend Fund Matter?
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.