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.
Moreover, 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.
Below, we share with you three top-ranked diversified bond mutual funds, viz., BlackRock Floating Rate Income Inv Fund BFRAX, Ave Maria Bond Fund AVEFX, and Aristotle Strategic Income Fund PLSFX. Each has earned 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.
BlackRock Floating Rate Income Inv Fund invests the majority of its assets in floating rate investments and other economically similar investments, which enable the fund to achieve a floating rate of income. BFRAX also invests in senior floating-rate loans or second-lien floating-rate loans.
BlackRock Floating Rate Income Inv Fund has three-year annualized returns of 4.8%. BFRAX has an expense ratio of 0.91% compared with the category average of 1.03%.
Ave Maria Bond Fund seeks preservation of principal with a reasonable level of current income. AVEFX invests primarily in investment-grade debt securities of primarily domestic issuers, including corporations, government agencies and municipalities, as well as mortgage-backed and asset-backed securities.
Ave Maria Bond Fund has three-year annualized returns of 1.5%. As of the end of September 2023, AVEFX had 2.2% of its assets invested in US TREAS INFL PROTECTED N.
Aristotle Strategic Income Fund invests in debt instruments that generate income. PLSFX’s allocations to non-investment-grade debt instruments and investment-grade debt instruments vary on the advisor’s view of market conditions.
Aristotle Strategic Income Fund has three-year annualized returns of 0.7%. Michael Marzouk has been one of the fund managers of PLSFX since 2016.
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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