For investors looking at parking their funds with bonds, U.S. government securities are probably the safest possible investments in the category. Default risk is almost non-existent in this case, thought the trade-off is that the yields on such instruments are consequentially lower, a price for the quality of the investments. Moreover, interest payments on many treasury securities are exempt from local and state taxes. Consequentially, mutual funds holding government securities are the safest bond funds and a natural choice for the risk averse.
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, then click here.
JPMorgan Government Bond A (NASDAQ:OGGAX - News) seeks high current income and preservation of capital invested. The majority of its assets are used to purchase bonds issued by the U.S. Government and its agencies. The average weighted maturity period of its portfolio ranges from three to fifteen years. The government bond mutual fund returned 5.93% over the last one year period.
The Fund Manager is Michael J. Sais and he has managed this government bond fund since 1996.
Wasatch-Hoisington US Treasury (NASDAQ:WHOSX - News) invests at least 90% of its assets in U.S Treasury securities and repurchase agreements backed by such instruments. The fund also purchases long term U.S. Treasury Bonds. The government bond mutual fund has a three year annualized return of 14.56%.
The government bond mutual fund has a minimum initial investment of $2,000 and an expense ratio of 0.75% compared to a category average of 0.84%.
Rydex Government Long Bond 1.2x Strategy (NASDAQ:RYGBX - News) seeks returns which are 120% of the price movement of U.S. long Treasury bonds. The majority of the funds assets are utilized to purchase U.S. government securities. The government bond mutual fund returned 24.96 % over the last one year period.
As of October 2011, this government bond mutual fund held 7 issues, with 89.69% of its total assets invested in United Treasury Bond 3.75%.
Fidelity Spartan Long-Term Treasury Bond Index (NASDAQ:FLBIX - News) invests at least 80% 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 has a five year annualized return of 9.63%.
The Fund Manager is Curt Hollingsworth and he has managed this government bond fund since 2009.
Vanguard Long-Term Treasury Investor (NASDAQ:VUSTX - News) seeks current income which is appreciable and sustainable. At least 80% of its assets are used to purchase securities issued by the U.S. Treasury, including bills, bond and notes. The government bond mutual fund returned 16.81% over the last one year period.
The government bond mutual fund has a minimum initial investment of $3,000 and an expense ratio of 0.22% compared to a category average of 0.84%.
To view the Zacks Rank and past performance of all government bond mutual funds, then click here.
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 http://www.zacks.com/funds.
More From Zacks.com