Balanced portfolios combine various asset classes and investment strategies to balance an appropriate level of risk with an acceptable level of return. These portfolios are typically comprised of a mix of equities (i.e. stocks) and fixed income (i.e. bonds). Historically, bonds have served three major purposes in balanced portfolios: diversification, capital preservation, and income generation.
![What is the role of fixed income in a balanced portfolio?](https://www.godseyandgibb.com/wp-content/uploads/2021/12/iStock-1217010787-1080x675.jpg)