Conservative investors prefer debt instruments not only because they safeguard the capital invested but also for the regular income flows they provide. Bonds bring a great deal of stability to an equity-heavy portfolio while providing dividends more frequently than individual bonds. U.S government bonds mutual funds usually invest in Treasury bills, notes and securities issued by government agencies. They are considered to be the safest in the bond fund category and are ideal options for the risk-averse investor.
Below we will share with you 5 top rated government 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 government bond funds, investors can click here to see the complete list of funds .
MassMutual Select Strategic Bond A (MSBAX) seeks total return. It invests majority of its assets in fixed income instruments and other debt securities of both U.S. and non U.S. issuers which may include corporate bonds and other securities that are backed by the U.S. government or its entities. It may also invest in money market securities and mortgage backed securities. The government bond mutual fund returned 6.39% over the last one year period.
The fund has an expense ratio of 1.14% as compared to category average of 0.88%.
Dreyfus US Treasury Long-Term (DRGBX) invests major portion of its assets in U.S. Treasury instruments. It may also invest in other instruments which are approved by the domestic government or issued by its entities. It generally has duration of more than equal to 7.5 years and minimum of 10 years of weighted duration of maturity. The government bond mutual fund returned 8.60% over the last one year period.
Robert Bayston is the fund manager and has managed this fund since 2008.
Fidelity Spartan Long-Term Treasury Bond Index Fund Fidelity Advantage (FLBAX) seeks high current income. The fund invests a lion's share of its assets in securities listed in Barclays U.S. Long Treasury Bond Index. The fund tries to duplicate the performance of Barclays U.S. Long Treasury Bond Index by using statistical sampling techniques on the back of interest rate sensitivity and maturity among others. The government bond mutual fund returned 9.43% over the last one year period.
As of June 2014, this fund held 42 issues with 6.22% of its assets invested in US Treasury Bond 3.75%.
PIMCO Real Return A (PRTNX) invests heavily in inflation-indexed bonds issued by the governments or by their affiliated agencies. This may include derivatives such as options, futures and swaps. Although it invests in investment grade instruments, it may also invest a maximum of 10% of its assets in junk bonds. The government bond mutual fund returned 4.91% over the last one year period.
This non-diversified fund has an expense ratio of 0.85% as compared to category average of 0.79%.
Vanguard Long-Term Treasury (VUSTX) seeks a high level of current income which is sustainable. The fund invests a large share of its assets in U.S. Treasury securities such as bills and bonds. It aims to have an average weighted maturity period between 15 to 30 years. The government bond mutual fund returned 9.51% over the last one year period.
David Glocke is the fund manager and has managed this fund since 2001.
To view the Zacks Rank and past performance of all government 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 .View All Zacks #1 Ranked Mutual Funds
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