Moderate allocation funds are a popular investment vehicle because they provide investors with exposure to both growth and value. Investors seeking diversification in asset allocation may find these funds attractive because they strike a balance between long-term capital appreciation and preservation of capital. In addition, by providing income through dividend-paying equities and fixed-income instruments, these investments typically have much lower volatility than pure growth strategies. There are hundreds of mutual funds that fit into this blended value and growth category. While many of these funds have similar profiles, a few stand out for their longevity and consistency of returns. The best funds in this group also offer low expense ratios, quality management teams and limited turnover of assets. The following is an analysis of two appealing funds in this category that have long, successful track records.

Vanguard STAR Investor Shares (VGSTX)

Vanguard STAR Investor Shares ("VGSTX") is part of the moderate allocation category of the Vanguard fund family. The fund began trading on March 29, 1985, and has received a four-star rating from Morningstar over three-, five- and 10-year time frames. VGSTX is structured as a fund of funds, which means it invests in other Vanguard mutual funds. It seeks out a diversified approach to investing and allocates 60 to 70% of its assets to mutual funds that invest in equities, 20 to 30% of its assets to funds that invest in bonds, and 10 to 20% to funds that invest in short-term, fixed-income instruments. VGSTX has a minimum required initial investment of $1,000, and a net expense ratio of 0.34% from its investment in other funds. The fund has generated above-average returns over multiple time horizons. As of March 29, 2016, its three-year investor returns ranked 27th-best among the 861 funds ranked over this time period, while it ranked 25th over a five-year time period among the 745 funds included as its peers. The fund's 10-year returns ranked 22nd among the 500 funds in its category. VGSTX was rated by Morningstar as having average risk for its category over three-, five- and 10-year time horizons. VGSTX is managed by William Coleman, who joined Vanguard in 2006 and began managing the fund in 2013. Since the fund allocates its assets to other Vanguard mutual funds, investors receive the benefits of diversifying risk among several managers with different strategies.

Fidelity Balanced Fund (FBALX)

The Fidelity Balanced Fund ("FBALX") is in the moderate allocation category of the Fidelity fund family. The fund has received a five-star Morningstar rating over a three-year time horizon, and a four-star rating over five- and 10-year time frames. Its strategy is to target income and capital gains while taking moderate risks. FBALX invests approximately 60% of its assets in equities and the rest in fixed-income securities, including high-yield debt securities. The fund allocates at least 25% of total assets to senior tranches of fixed-income securities, including preferred stock. FBALX, which began trading on Nov. 6, 1986, has an annual expense ratio of 0.55% and a minimum required initial investment of $2,500. Like VGSTX, it has performed extremely well over multiple time frames relative to its peer group. As of March 29, 2016, the fund's three-year returns ranked sixth-best among the 861 funds ranked over this time period. Its five-year performance ranked it ninth among the 745 funds in its category. The fund achieved the 17th-highest 10-year returns of the 500 funds ranked in its category. Tobias Welo has been the lead manager of the fund since Nov. 14, 2011.

Comparing VGSTX and FBALX

Like most index investments, moderate allocation funds are ideal for long-term, buy-and-hold investors. Moderate allocation funds allow investors to reap benefits from both growth and value investing without having to time business cycles. Both VGSTX and FBALX are attractive opportunities in this category and have different strengths. Since VGSTX is a fund of funds, investors have diversification benefits from different management styles, which FBALX does not offer. In addition, VGSTX has lower fees than FBALX. However, FBALX has performed slightly better than VGSTX over both intermediate and longer time frames. The two funds have similar allocation strategies, which makes a decision between them a very close call.