Investing in diversified bond funds is preferred to individual bond investing, as building a portfolio of the second type may prove relatively more expensive. A higher level of liquidity also makes diversified bond funds more attractive.
Moreover, mutual funds having significant exposure to diversified bonds are excellent choices for investors seeking steady returns with a relatively low level of risk. Investing in funds that maintain a portfolio of bonds issued across a wide range of market sectors also reduces sector-specific risk.
Below, we share with you three top-ranked diversified bond mutual funds, namely DWS Short Duration DBPIX, BBH Limited Duration BBBMX and Osterweis Strategic Income OSTIX. Each has a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds.
DWS Short Duration invests in fixed income securities rated within the top four credit rating categories by a nationally recognized statistical rating organization. It may invest in securities of diverse maturities. The fund has returned 4.5% over the past three years.
Bryan Dziuban has been one of the fund managers of DBPIX since 2024.
BBH Limited Duration aims for maximum total return. BBBMX invests in a well-diversified portfolio of durable, performing fixed-income instruments, primarily focused on asset-backed securities, notes and bonds. The fund has returned 5.7% over the past three years.
As of January 2025, BBBMX had 55.3% of its assets invested in Total Misc Bonds.
Osterweis Strategic Income invests primarily in income-bearing securities. OSTIX seeks to control risk through rigorous credit analysis, economic analysis, interest rate forecasts and sector trend review, and is not constrained by any particular duration or credit quality targets. The fund has returned 6.9% over the past three years.
OSTIX has an expense ratio of 0.81%.
To view the Zacks Rank and the past performance of all diversified bond mutual funds, investors can click here to see the complete list of diversified bond mutual funds.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
