Balanced mutual funds are a mix of assets designed to be an entire investment portfolio. Sometimes they are the classic 60%/40% mix of stocks and bonds, some are more or less aggressive. Target date funds are like an evolving balanced fund. They start off their life a very aggressive mix, as time passes the mix is adjusted to be more and more conservative and stable. The goal of target date funds is to provide a single fund for investors that will always match their investment needs. They are often named for their rough retirement year.
Target date and balanced mutual funds are boring. They do not have superstar managers or concentrated portfolios, often they just consist of a balanced mix of the fund company's other funds - a bond fund or two, a large cap stock fund, an international fund and some others, adjusted quarterly to be kept in the right blend.
Surprisingly, people who invest in balanced and target date funds often have some of the best returns! This comes from the tendency of balanced fund investors to invest regularly and not chase performance of popular equity funds. For people starting out investing or wanting as little involvement as possible in their savings, balanced and target date funds may be key. On that note, Vanguard, champion of low cost index funds, has launched a new target date fund for the youngest workers - those aiming to retire in 2060! The fund has a super low expense ratio of .18% and a minimum investment of $1,000. The mix may not be perfect for everyone, but it is a good place to start if you want to go it alone - the easy way.
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