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 Nuveen Preferred Securities & Income Fund NPSAX, T. Rowe Price Global Multi-sector Bond Fund PRSNX and Franklin Core Plus Bond Fund FRSTX. 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.
Nuveen Preferred Securities & Income Fund seeks a high level of current income as well as total return by investing most of its assets, along with borrowing, if any, in preferred securities and other income-producing securities. NPSAX advisors also invest in companies principally engaged in financial services, and securities rated investment grade and below-investment grade in various proportions.
Nuveen Preferred Securities & Income Fund has three-year annualized returns of 9.2%. As of the end of May 2025, NPSAX had 60.5% of its assets invested in Preferred Stocks.
T. Rowe Price Global Multi-sector Bond Fund invests most of its assets, along with borrowings, if any, in foreign bonds of governments or companies that have substantial business outside the U.S. PRSNX advisors generally invest in a variety of issues to enhance income and achieve capital growth.
T. Rowe Price Global Multi-sector Bond Fund has three-year annualized returns of 8%. PRSNX has an expense ratio of 0.64%.
Franklin Core Plus Bond Fund invests most of its net assets in domestic and foreign (including emerging market countries) debt securities. FRSTX advisors consider debt securities as those like fixed, variable and floating rate income securities, including bonds, securities issued by U.S. and foreign governments and its agency, corporate loans, mortgage-backed securities and other asset-backed securities.
Franklin Core Plus Bond Fund has three-year annualized returns of 7.1%. Patricia O'Connor has been the fund manager of FRSTX since February 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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This article originally published on Zacks Investment Research (zacks.com).
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