When Peter Staas profiled T. Row Price Balanced (RPBAX) last August, the fund had come off a banner year in 2009, when it gained 28.8 percent to retake most of the ground it had lost in 2008. The fund went on to return 12.5 percent in 2010, outpacing its peers in Morningstar’s Conservative Allocation category by 0.7 percent. Since we highlighted the fund last year, T. Rowe Price Balanced has returned 17.7 percent.

The fund’s 65 percent equity allocation allows it to participate in market rallies. But this reliance on equities to drive performance can lead to volatility when markets decline—the fund lost 28.4 percent in 2008.

Manager Edmund Notzon III continues to favor equities over bonds as the economic recovery continues. The fund’s top five equity holdings consist of technology darlings Apple (NSDQ: AAPL), Google (NSDQ: GOOG) and Amazon.com (NSDQ: AMZN), as well as oil majors ExxonMobil Corp (NYSE: XOM) and Chevron Corp (NYSE: CVX) Amazon.com and apple have posted double-digit annual returns for the fund since 2009.

Notzon has boosted exposure to high-yield bonds and reduced the fund’s allocation to investment-grade bonds in anticipation of rising interest rates.

Notzon, who managed the fund for almost 30 years, will retire in October, though this shouldn’t be a cause for concern. The fund will be helmed by Charles Shriver, who joined the company in 1991 and has been involved with asset-allocation funds for 12 years.

The fund’s expense ratio of 0.68 percent is a bargain compared to its peers, which on average charge more than 1 percent. With consistent gains and a low expense ratio, T. Row Price Balanced is an attractive option for investors who lack the stomach for significant risk.