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.
Putnam American Government Income A (PAGVX) seeks substantial current income. A large share of the fund’s assets is utilized to purchase bonds as well as asset backed debt securities that are issued by the U.S. government and also by its agencies. The fund may also invest in derivatives. The government bond mutual has a five year annualized return of 6.40%.
This fund has an expense ratio of 0.87% as compared to category average of 0.95%.
Homestead Short-Term Government (HOSGX) invests a majority of its assets in fixed-income securities that are backed by the U.S. government. The mutual fund also invests a portion of its assets in municipal bonds, collateralized mortgage obligations, asset-backed securities, corporate bonds and money market securities. The government bond mutual has a five year annualized return of 1.70%.
Douglas G. Kern is the fund manager and has managed this government bond fund since 1995.
Western Asset Mortgage Backed Securities (SGVAX) seeks current income. A majority of assets are invested a large share of its assets in mortgage-backed securities issued by government backed institutions such as Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). The government bond mutual has a five year annualized return of 6.87%.
The fund has an expense ratio of 0.99% as compared to category average of 0.88%.
Driehaus Active Income (LCMAX) seeks both income and capital growth. It invests the majority of its assets in US floating rate and fixed income securities. Investments are also parked in investment graded and junk bonds. The government bond mutual has a five year annualized return of 5.95%.
K.C. Nelson is the fund manager and has managed this fund since 2009.
Managers Intermediate Duration Government (MGIDX) invests a majority of its assets debt securities issued by the U.S. government or its agencies. The fund may utilize derivatives and other hybrid instruments to reduce risk or enhance return. The government bond mutual has a five year annualized return of 5.48%.
The fund has an expense ratio of 0.89% as compared to category average of 0.95%.
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Read the analyst report on PAGVX
Read the analyst report on HOSGX
Read the analyst report on SGVAX
Read the analyst report on LCMAX
Read the analyst report on MGIDX
View All Zacks #1 Ranked Mutual Funds
Zacks Investment Research
- Mutual Funds
- Personal Investing Ideas & Strategies
- mutual funds