Tensions are almost boiling over in the Ukrainian conflict with
Russia. It was revealed that Russian troops and vehicles have
begun to amass on the Eastern border with Ukraine. Moreover, the
recent sanctions against Russia by the U.S. and their European
allies, caused President Putin to order his government to prepare
retaliatory measures against the U.S. and their European
While this might be enough to have investors looking into the bond
market for some safety, this was not the only negative news to come
out of Europe and Russia.
Italy, posted second quarter GDP data, and the numbers indicated
that the country had once again slid back into a recession.
Germany, saw manufacturing numbers decline. The United
Kingdom saw industrial production output increase by a paltry 0.3%
(month to month), while the consensus estimate was for 0.6%
The combination of this negative news caused the Asian markets to
decline, then the UK markets slid, and finally caused the U.S.
markets to open lower on the day.
All these factors have caused investors to flee to safety by
purchasing U.S. and German bonds. This caused the yields of
major Bonds to decline (note: bond yields decline as prices go up,
and bond yields go up while prices go down). The 10 year U.S.
note declined 4 basis points, while German bond yields declined
across the board, and the UK 10 year gilt dropped 7.5 basis points.
It is apparent that many smart investors are getting rid of their
now more tenuous assets, and are running as fast as they can to the
To protect against the declining economies in Europe and the
tensions in Russia, a savvy investor should look towards Investment
Grade Bond Mutual Funds. These funds tend to invest in bonds
issued by governments and corporations, or asset backed mortgage
bonds. With the usage of
Zacks Mutual Fund Rank
, investors can find the best producing safe haven.
Hot Investment Grade Bond Mutual Funds
Natixis Loomis Sayles Strategic Income Fund
), a Zacks Rank #1 (Strong Buy) seeks high current income with a
secondary objective of capital growth. The fund invests
substantially all of its assets in income producing securities
(including lower-quality securities, or 'junk bonds') with a focus
on U.S. corporate bonds, convertible securities, foreign debt
instruments, including those in emerging markets and U.S.
government securities. The fund declares dividends daily and pays
them monthly. The fund distributes capital gains annually.
This fund is heavy U.S. treasuries and Canadian government
Past Performance: 1 year 15.47%, 3 year 9.34%, 5 year 13.35%.
Delaware Extended Duration Bond Fund
), a Zacks Rank #1 (Strong Buy) seeks total return through a
combination of income and capital appreciation. The fund invests
primarily in U.S. corporate bonds that have investment grade credit
ratings in the four highest categories. The fund invests at a
greater total return than some U.S. government bond funds but at a
lower risk than many high-yield bond funds. The fund offers
dividends monthly and capital gains in November.
This fund is heavy top corporate companies like Verizon, Ingersoll
Rand, and Gilead.
Past Performance: 1 year 14.34%, 3 year 10.78%, 5 year 13.38%.
Vanguard Long-Term Investment-Grade Fund
), a Zacks Rank #1 (Strong Buy) seeks a high and sustainable level
of interest income. The fund invests in a widely diversified group
of long-term bonds, most of them issued by corporations with strong
credit ratings. It may also invest in U.S. Treasury securities and
mortgage-backed securities. The fund also seeks to improve
returns or its income stream by emphasizing individual securities
and sectors of the bond market that represent good value based upon
historical yield relationships. Dividends are declared daily and
distributed monthly. Capital gains, if any, are distributed
annually in December.
This diversified fun is heavy U.S. treasuries, Wells Fargo, General
Electric, and HSBC Holdings.
Past Performance: 1 year 12.16%, 3 year 9.40%, 5 year 10.28%.
Loomis Sayles Bond Fund
), a Zacks Rank #1 (Strong Buy) seeks high total investment return
through a combination of current income and capital
appreciation. The fund seeks to attain its objective by
normally investing substantially all of its assets in fixed income
securities, although up to 20% of its assets may be invested in
preferred stocks. The fund offers dividends monthly, and
capital gains annually.
The Loomis fund is heavy U.S. and Canadian bonds, Intel, and Ford.
Past Performance: 1 year 11.87%, 3 year 7.73%, 5 year 11.87%.
View All Zacks #1 Ranked Mutual Funds
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