5 Top Long-Term Government Bond Mutual Funds for High Return - Mutual Fund Commentary
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 mutual 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. Meanwhile, long-term funds usually provide a safer option for risk-averse investors, when compared to small-term and mid-term funds. These funds provide long-term performance history and assure more stability than what mid-term or small-term offer.
Below we will share with you 5 top rated long-term 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 long-term government bond mutual funds, investors can click here to see the complete list of funds.
Fidelity Spartan Long-Term Treasury Bond Index (FLBIX) invests a major portion of its assets in securities which are part of the Barclays Capital U.S. Long Treasury Bond index. The dollar-weighted average maturity period of the portfolio is at least 10 years or more. The government bond mutual fund returned 18.8% over the last one year period.
The fund has an expense ratio of 0.2% as compared to category average of 0.67%.
Wasatch-Hoisington US Treasury (WHOSX) seeks return that beats inflation with an emphasis on both capital growth and current income. The fund invests a lion’s share of its assets in U.S. Treasury securities and also in repurchase agreements backed by such securities. The government bond mutual fund returned 25.7% over the last one year period.
Van Hoisington is the fund manager and has managed this fund since 1996.
Rydex Government Long Bond 1.2x Strategy Investor (RYGBX) invests largely in U.S. government backed fixed income instruments as well as derivative instruments such as future contracts, swaps and options. It seeks 1.2 times the return of daily price movement of the Long Treasury Bond for U.S. government instruments. This non-diversified government bond mutual fund returned 27.4% over the last one year period.
The fund has an expense ratio of 0.97% as compared to category average of 1.47%.
Dreyfus US Treasury Long-Term (DRGBX) seeks total return with capital growth and current income. The fund invests a majority of its assets in U.S. Treasury instruments. It may also invest in other instruments which are approved by the domestic government or issued by its entities. It generally has a duration of more than or equal to 7.5 years and minimum of 10 years of weighted duration of maturity. This government bond mutual fund returned 17.8% over the last one year period.
As of January 2015, this fund held 19 issues with 10.54% of its assets invested in US Treasury Bond 2.875%.
Vanguard Long-Term Treasury (VUSTX) invests a large share of its assets in U.S. Treasury securities such as bills and bonds. The fund aims to have an average weighted maturity period between 15 to 30 years. It seeks high level of current income. This government bond mutual fund returned 19.1% over the last one year period.
David R. Glocke is the fund manager and has managed this fund since 2001.
To view the Zacks Rank and past performance of all long-term 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 at www.zacks.com/funds/mutual-funds.
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