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.
Western Asset Mortgage Backed Securities A (SGVAX) seeks current return. The fund invests the majority of its assets in mortgage backed securities. These may be issued by agencies such as the Government National Mortgage Association (Ginnie Mae) as well as government sponsored agencies. The government bond mutual fund returned 7.82% over the last one year period.
The government bond mutual fund has an expense ratio of 1.02% compared to a category average of 0.97%.
GMO Inflation Indexed Plus Bond III (GMITX) invests heavily in inflation-protected securities. The fund aims to provide total return greater than the Barclays Capital U.S. Treasury Inflation Notes index. The government bond mutual fund is non-diversified and returned 14.68% over the last one year period.
The Fund Manager is Thomas F. Cooper and he has managed this government bond fund since 2006.
Columbia Inflation Protected Securities A (APSAX) seeks total return greater than the long term inflation rate. The fund invests a large share of its assets in inflation indexed debt securities issued by the U.S. Treasury. The government bond mutual fund returned 8.19% over the last one year period.
The government bond mutual fund has an expense ratio of 0.85% compared to a category average of 0.80%.
American Century Zero Coupon (BTTTX) invests heavily in zero-coupon securities, mainly in U.S. Treasury securities and their equivalents. A maximum of 20% of its assets may be invested in AAA-rated zero-coupon U.S. government agency securities. The government bond mutual fund returned 11.22% over the last one year period.
As of September 2012, this government bond mutual fund held 36 issues, with 19.22% of its total assets invested in US Treasury Sec Stripped Int Pmt.
Direxion Monthly 10 Year Note Bull 2X (DXKLX) seeks monthly returns which are 2x the returns of the NYSE Current 10-Year U.S. Treasury Index. The fund invests the majority of its assets in domestic government securities that may consist of index and financial securities to create long positions. It may also invest in short term securities with high credit quality. The government bond mutual fund returned 12.08% over the last one year period.
The Fund Manager is Paul Brigandi and he has managed this government bond fund since 2005.
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
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