Among more than 4,300 domestic stock funds, more than 1,400 are in the blend category, according to Morningstar. If you limit yourself to go-go growth funds and bargain-hunting value funds, you essentially take 30% of all funds off the table. Indeed, a blend fund can serve as the core of your portfolio. You might start out with an index fund (designed to track a particular stock market index), for low costs and tax-efficiency, or with an actively-managed fund that’s widely diversified. Then you can add other funds if you want more exposure to certain areas.
Attractive blend funds include: Vanguard Primecap, which is among the leaders in 5-, 10- and 15-year performance. A $10,000 investment in 1985 would now be worth over $150,000. Rydex Nova Fund, an index fund that seeks extra returns by buying futures and options as well as individual stocks. Schwab 1000, a low-cost, tax-efficient funds that tracks Schwab’s own index of the 1,000 largest U.S. companies.
