Balance is certainly the goal of any long-term investor -- but achieving it in today's market can require the discipline of an accomplished yogi.

Perhaps that's why many investors are turning to the financial gurus who serve as portfolio managers of balanced funds. Such funds can vary widely, though, and that means investors need to be aware of what to expect from a balanced fund when deciding whether to buy or sell.

A balanced fund is a type of allocation fund that typically has 50% to 60% of its assets in stocks and the remainder in bonds. Don't confuse this type of fund with "blend" funds, a term Morningstar uses for funds that invest in both growth and value stocks but not other asset classes. Balanced funds have provided a safe haven during the market upheaval of the past few years. Case in point: Conservative allocation funds -- defined by Morningstar as those that have 20% to 50% in equities and 50% or more in fixed income and cash -- fell just 3.5% in 2002, as the S&P 500 slid 22.1%.

Now that equities are rallying, however, do balanced funds make less sense? Conservative allocation funds are up a mere 6% this year (as of July 30), and while moderate allocation funds (those with more than 50% in equities) are up 9.2%, both categories lag the S&P 500's 13.3% run-up in the same period.

But to bail on balanced funds because a particular asset class rallies defeats the purpose of investing in such a fund in the first place. Balanced funds are designed with the goal of always having one part of the portfolio participating in an upswing, mitigating the inevitable downturn of another. Indeed, balanced funds are intended to be a microcosm of what everyone's portfolio should look like. They're a great choice for intermediate-term goals -- for, say, college tuition in five or so years -- and can be a valuable core holding.

Some balanced funds are very rigid in their makeup, always holding the same mix of stocks and bonds. Other balanced funds -- often called asset allocation funds -- are more fluid in what and how much they hold in the various asset classes. Managers of these funds are generally market-timing, and that makes these funds less attractive as a core portfolio holding. Still other balanced funds hold a spectrum of asset classes that make them almost resemble hedge funds in breadth of underlying investments.

The ( PRPFX) Permanent Portfolio is in the latter category. The $55 million fund has a stringent and conservative allocation that actually requires shareholder approval to change. The largest allocation is the 35% bond mix, mostly intermediate- and long-term Treasuries (which make up 20.45% of the fund), but there are also some high-grade corporate bonds. There's also 15% in aggressive growth stocks such as Symantec ( SYMC - Get Report), which makes up the fund's third-largest holding, at 3.55% of its portfolio.

But here's where the fund diverges from the norm: It also has 20% in gold and 5% in silver. "That doesn't mean mining stocks, I'm talking about the actual metal," says manager Michael Cuggino. Add to that an allocation of 10% in Swiss-denominated securities and 15% in natural resources (here's where some mining stocks might show up) and real estate (some real estate investment trusts, some not). The fund's rigid allocation means that managers can't time the markets, and investors always know where their money is invested. It is, however, a very conservative and remarkably allocated fund, and its returns shouldn't be compared with those of the S&P.

Almost on the other end of the spectrum is the somewhat new and very tiny $11 million ( VILLX) Villere Balanced fund. This concentrated fund has just 20 stocks -- which make up 69.5% of the portfolio -- and 15 bonds. "We focus on stock-picking," manager Sandy Villere III says. "We visit management, talk to suppliers and customers. And we like little-known stocks -- those you've never heard of, that's our style." As two favorites, Villere mentions SCP Pool ( POOL - Get Report), the largest supplier of pool supplies and equipment, and Luminex ( LMNX - Get Report), which produces some of the most efficient tests for the life sciences industry.

The Villere fund's performance has been admirable since its inception in 1999, and the fund is up 13.02% year to date. But its concentrated stock portfolio still makes it a riskier proposition than many balanced funds.

The ( VTMFX) Vanguard Tax-Managed Balanced fund takes an entirely different tack, although it too limits itself to stocks and bonds (in about a 50/50 mix). The fund buys the lowest-dividend stocks in the Russell 1000 index and invests heavily in municipal bonds, and that means virtually all the income is tax-free. That's still a better deal than the new tax law's 15% rate, which could prove to be ephemeral. Gus Sauter, Vanguard's indexing guru, manages the stock portion of the portfolio -- and that helps to keep the fund's expenses at a super-low 0.18%.

A slightly more aggressive -- but equally broad and cheap -- balanced fund is the ( DODBX) Dodge & Cox Balanced fund. The 60% allocation in stocks is primarily made up of large value, with a healthy mix of mid-caps thrown in. As with Vanguard, investors enamored (as all should be) with the fund family's long track record of solid performance and low expenses will find the balanced fund offering completely in line with their expectations.

And that, after all, is part of achieving balance.