Conservative investors prefer debt instruments not only because they safeguard the capital invested but also for the regular income flows they provide. Bonds bring a great deal of stability to an equity-heavy portfolio while providing dividends more frequently than individual bonds. U.S government bonds funds usually invest in Treasury bills, notes and securities issued by government agencies. They are considered to be the safest in the bond fund category and are ideal options for the risk-averse investor.
Below we will share with you 5 top rated government bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all government bond funds, investors can click here to see the complete list of funds.
Lord Abbett Short Duration Income A (LALDX) invests a minimum of 65% of its assets in different kind of investment grade debt securities including the ones which are backed by the U.S. Government or government sponsored securities. The government bond mutual fund returned 1.49% over the last one year period.
Andrew A. O'Brien is the fund manager and has managed this government bond fund since 1998.
Prudential Absolute Return Bond A (PADAX) seeks long-term returns. The fund invests in debt or instruments that give exposure to bonds. A maximum of half of its assets may be utilized to purchase junk bonds. The government bond mutual fund returned 1.20% over the last one year period.
The fund has an expense ratio of 1.14% as compared to category average of 1.34%.
Sentinel Total Return Bond A (SATRX) seeks high return from a combination of capital growth and current income. The fund invests predominantly in different kind of fixed-income securities regardless of its duration. Half of its assets may be invested in junk bonds. The government bond mutual fund returned 3.70% over the last one year period.
Jason M. Doiron is the fund manager and has managed this fund since 2010.
Lord Abbett Floating Rate A (LFRAX) invests a majority of its net assets in senior loans which carry an adjustable or floating rate. A maximum of 20% of its assets are invested in unsecured senior loans. At least 20% is also invested in different types of debt and short term securities. Derivatives attract investment of not more than 10% of its total assets. The government bond mutual fund returned 5.42% over the last one year period.
As of September 2013, this government bond mutual fund held 484 issues, with 1.39% of its total assets invested in First Data Corporation.
Driehaus Select Credit (DRSLX) seeks income in different market conditions. A majority of investment is made in U.S. floating rate and fixed income securities. Investments can be made in investment grade bonds and junk bonds. The government bond mutual fund returned 5.65% over the last one year period.
The fund has an expense ratio of 1.23% as compared to category average of 1.34%.
To view the Zacks Rank and past performance of all government bond mutual funds, investors can click here to see the complete list of funds.
About Zacks Mutual Fund Rank
By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank.