A short-term government bond fund is a mutual fund that is limited by its investment objectives and fund bylaws to invest primarily in short-term obligations of the federal government or its agencies. Depending on the fund’s definition, the short term can be up to five years.
Mutual funds that invest in government debt securities are among the most secure investment options that provide regular income while protecting the capital invested. Funds that are part of this category bring a great deal of stability to a portfolio with a large proportion of equity. They pay out dividends more frequently than individual bonds. Hence, these are considered the safest in the bond fund category and are ideal for risk-averse investors.
Below, we share with you three top-ranked short-term government bond mutual funds — SEI Short-Duration Government TCSGX, Federated Hermes Short-Term Govt IS FSGVX and CM Advisors Fixed Income CMFIX. 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.
Sei Short-Duration Government primarily invests its net assets in U.S. Treasury obligations, along with mortgage-backed securities and repurchase agreements guaranteed by U.S. government agencies or instrumentalities. TCSGX advisors may also allocate to securities issued by different U.S. government entities.The fund has returned 4.5% over the past three years.
As of July 2025, TCSGX had 25.1% of its net assets invested in Total Misc. Bonds.
Federated Hermes Short-Term Govt IS mainly invests in a portfolio composed of U.S. Treasury securities and U.S. government agency securities with maturities ranging from one to three years, along with related derivative contracts. The fund has returned 4.1% over the past three years.
J. Andrew Kirschler has been one of the fund managers of FSGVX since July 2013.
CM Advisors Fixed Income mainly invests in U.S. dollar fixed income assets considered undervalued, including corporate, government and mortgage-backed bonds, focusing mainly on debt securities and related investment companies emphasizing fixed income holdings. The fund has returned 7.8% over the past three years.
CMFIX has an expense ratio of 0.87%.
To view the Zacks Rank and the past performance of all short-term government bond mutual funds, investors can click here to see the complete list of short-term government bond mutual funds.
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This article originally published on Zacks Investment Research (zacks.com).
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