How are balanced funds better than stocks and basic mutual funds?

It’s difficult to compare these investment avenues without knowing the metrics being compared. Balanced advantage funds are better in what category? Returns, consistency, or risk? This is just one aspect. You can also categorize based on time horizon and kinds of investors. It’s unfair to compare without putting down specific details. Stocks belong to a different category of investments. It is an asset class in itself. Mutual funds, on the other hand, are investment vehicles that invest in these asset classes. Thus, it’s an apples and oranges comparison between balanced funds and stocks. 

A balanced fund is a bridge between equity mutual funds and debt funds. It attempts to seek the best of both worlds. The portfolio manager maintains the asset mix consistent with the fund’s investment policies, so there’s no need for investors to constantly adjust allocations. The primary advantage of balanced funds is to achieve diversification. The fund manager takes care of the asset allocation, as they rebalance the fund on the basis of need.

These are the best for those investors who want to benefit from the stock market but don't have the heart for volatility. Hybrid funds invest in multiple asset classes giving investors exposure to equity, debt, gold-related instruments (including ETF), and other asset classes (as permissible) depending on the type of fund and its investment objective. This saves the investors the hassle of investing in each asset class separately while also reducing the cost involved in investing in each asset class-based fund. 

If these are some of the qualities you are looking for in a fund, and don’t want to invest in either equities or debt, then a balanced fund is apt for you and could be a part of your portfolio. And from that personal perspective, will work better than equity or debt funds.