What fund type is recommended for exposure to both fixed income and equity?

A balanced fund is specifically designed to provide investors with exposure to both fixed income and equity markets. By holding a mix of stocks and bonds, balanced funds aim to balance the risks and returns associated with these different asset types. This characteristic allows investors to benefit from the potential growth of equities while also seeking the stability that fixed income investments typically offer.

In contrast, an equity fund primarily focuses on investing in stocks, which may result in higher volatility without the cushioning effect provided by fixed income assets. A money market fund, on the other hand, invests in short-term debt instruments and is generally focused on capital preservation and liquidity rather than growth, therefore lacking exposure to equities. Lastly, an index fund primarily tracks a specific index of stocks or bonds, which means it does not inherently combine both asset classes like a balanced fund does. Thus, the balanced fund is the most suitable option for investors looking to diversify across both fixed income and equity investments to achieve a more balanced risk-return profile.