Zacks #1 Ranked Diversified Bond Mutual Funds - Best of Funds

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Fixed-income securities are the preferred choice of investors who are ready to forgo capital growth for regular income flows. The expense involved in creating such a portfolio of bonds from different categories may be quite considerable. This is why most investors select mutual funds since they are a convenient and affordable method of investing in bonds. Diversified bond funds further reduce the risk involved by holding securities from different sectors. A downturn in any one sector therefore only has a partial effect on the fund's fortunes.

Below we will share with you 5 top rated diversified bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all diversified bond mutual funds, investors can click here to see the complete list of funds .

Prudential Total Return Bond A (PDBAX) seeks total return. The fund invests a lion's share of its assets in bonds having a maturity of more than one year. The fund doesn't invest in preferred stocks. It may also invest up to 50% of its assets in high-yield debt securities below investment grade but not lower than CCC. The diversified bond mutual fund returned 6.1% in the last one year period.

The diversified bond mutual fund has an expense ratio of 0.85% compared to a category average of 0.88%.

Loomis Sayles Fixed Income (LSFIX) seeks current income and preservation of capital. The fund invests most of its assets to purchase fixed income securities. It may invest a maximum of 35% of its assets in below investment grade securities. Not more than 20% of its assets may be used to purchase common and preferred stocks. The diversified bond mutual fund returned 10.8% in the last one year period.

As of May 2014, this diversified bond mutual fund held 473 issues, with 3.63% of its total assets invested in US Treasury Note 0.375%.

DWS Unconstrained Income A (KSTAX) invests mostly in fixed income securities issued by both domestic and foreign companies. It may invest all its assets in investment-grade fixed income securities or in junk bonds. The fund may also invest in emerging economies, mortgage backed securities, adjustable rate loans, floating rate debt securities and common stocks that pay dividends. The diversified bond mutual fund returned 5.7% in the last one year period.

The diversified bond mutual fund has an expense ratio of 1% compared to a category average of 1.10%.

Columbia Strategic Income A (COSIX) invests in three categories of debt securities. These include U.S. government bonds that may include asset backed securities; foreign securities, including those issued from emerging markets, and corporate debt securities that may be rated below investment grade. The diversified bond mutual fund returned 6% in the last one year period.

Colin Lundgren is the fund manager and he has managed this diversified bond mutual fund since 2010.

Federated Strategic Income A (STIAX) invests in three major categories of fixed-income securities. These include domestic investment-grade, domestic noninvestment-grade corporate and investment graded and non-investment grade foreign investments. The diversified bond mutual fund returned 5.5% in the last one year period.

The diversified bond mutual fund has an expense ratio of 1.26% compared to a category average of 1.10%.

To view the Zacks Rank and past performance of all diversified bond mutual funds, investors can click here to see the complete list of funds .

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank in our Mutual Fund Center .


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Mutual Funds


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