Which benefit can typically be expected from a balanced mutual fund compared to individual bonds?

A balanced mutual fund is designed to invest in various asset classes, typically a mix of stocks and bonds, which provides a broad range of investments within a single fund. This diversification helps to spread out risk because it reduces the impact of a poor-performing asset class on the overall performance of the fund.

When compared to individual bonds, which represent a single investment in a single entity, a balanced mutual fund's diversified nature can mitigate specific risks associated with any one company or sector. This means that if one investment underperforms, the impact on the overall fund may be less severe because the gains from better-performing investments can help offset losses.

Diversification is a fundamental principle in investment strategy, allowing investors to achieve a more stable performance over time, making it a key benefit of balanced mutual funds.