History

Blend mutual funds were made popular by the investment research firm Morningstar Inc. when it published the first mutual fund sourcebook in 1984. The company was attempting to create a more diversified and less risky investment strategy. Morningstar also created a graphical representation of a fund's characteristics through the use of an equity style box.

Style Box Description

There are nine squares in an equity style box. The vertical axis represents three different company sizes---large, medium and small---which are determined by a fund's market capitalization. The three sections on the horizontal axis show the category of stocks in a portfolio: value, value/growth blend or growth stocks. The purpose of the box is to assist in the evaluation of securities.

Advantages

A blend fund allows investors to diversify their investments within a single fund. Usually they are somewhat less risky than stock mutual funds.

Risks

While blend funds tend to be less risky than stock mutual funds, they can be more risky than bond funds or money market funds, which are relatively stable.

Considerations

Before investing in a blend fund, determine the fees and expenses that they charge. Management and investment advisory fees normally range from .5 percent to 1 percent of the fund's annual assets. You should also find out the expense ratio, which represents the operational costs passed on to the investor. A typical expense ratio for a mutual fund is currently 1.5 percent.

Source:

Wise Geek

Investopedia