Mutual funds investing in debt securities are among the most-secure investment options which provide regular income while protecting the capital invested. Funds that are part of this category bring a great deal of stability to portfolios with a large proportion of equity, while providing dividends more frequently than individual bonds. U.S. government bond funds usually invest in Treasury bills, notes and securities issued by government agencies. They are considered the safest in the bond fund category and are ideal for risk-averse investors.
Meanwhile, a short-term government bond fund is a mutual fund that's limited by its investment objectives and fund bylaws to investing primarily in short-term obligations of the federal government or its agencies. Depending on the fund's definition, short term can be up to five years.
Below we will share with you three top rated short-term government bond mutual funds. Each has earned a Zacks Mutual Fund #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. Investors can click here to see the complete list of funds .
PIA Short Term Securities Advisor PIASX invests a large chunk of its assets in securities that have maturity period of three years or lower. The fund generally invests in those securities that are rated Baa3 and/or BBB- or higher by a Nationally Recognized Statistical Rating Organization. PIA Short Term Securities Advisor has three-year annualized returns of 1.1%.
PIASX carries an expense ratio of 0.39% compared with the category average of 0.51%.
Prudential Short Duration High Yield Income A HYSAX invests a huge part of its assets in high-yield fixed income securities that are rated lower than investment grade. The fund invests in investments with different maturities. HYSAX seeks maximization of income. Prudential Short Duration High Yield Income A has three-year annualized returns of 4.4%.
Ryan Kelly is one of the fund managers of HYSAX since 2012.
PNC Ultra Short Bond I PNCIX maintains a diverse portfolio by investing mainly in fixed-income securities like investment-grade securities. These investment-grade securities include domestic government securities, mortgage-backed securities, asset-backed securities, and corporate bonds. PNCIX's portfolio is believed to have maturity of 18 months or lower. PNC Ultra Short Bond I has three-year annualized returns of 0.9%.
As of October 2018, PNCIX held 107 issues, with 4.23% of its assets invested in United States Treasury Notes 1.5%.
To view the Zacks Rank and past performance of all short-term government bond mutual funds, investors can click here to see the complete list of funds .
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (PIASX): Fund Analysis Report Get Your Free (PNCIX): Fund Analysis Report Get Your Free (HYSAX): Fund Analysis Report To read this article on Zacks.com click here. Zacks Investment Research