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. 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 diversified bond funds .
Morgan Stanley Global Fixed Income Opportunities ADINAX seeks growth of income. The fund invests a large chunk of its assets in fixed-income securities. DINAX may also invest around 65% of its assets in any particular one market segment or asset class. It may also invest not more than one-fifth of its assets in public bank loans issued by financial institutions, including banks. Morgan Stanley Global Fixed Income Opportunities A has one-year annualized returns of 5%.
As of December 2017, DINAX held 523 issues, with 7.95% of its assets invested in Us Ultra Bond Cbt Mar18 Xcbt 20180329.
Putnam Absolute Return 100 Y PARYX seeks growth of returns, by maintaining a well-diversified portfolio. This portfolio reflects several uncorrelated fixed-income strategies designed to utilize market inefficiencies across multiple fixed-income sectors and global markets. Putnam Absolute Return 100 Y has returned 2.6% over the last one-year period.
PARYX has an expense ratio of 0.40% compared with the category average of 1.20%.
Putnam Diversified Income Trust A PDINX seeks high income. PDINX primarily invests in bonds that are securitized debt instruments including mortgage-backed investments and in other obligations of companies as well as governments globally. Putnam Diversified Income Trust A has returned 6.4% over the last one-year period.
D. William Kohli has been one of the fund managers of PDINX since 1994.
To view the Zacks Rank and past performance of all diversified bond mutual funds, investors can click here to see the complete list of diversified bond funds .
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.