Mutual funds investing in debt securities are among the most secure investment options which provide regular income while protecting capital invested. Funds which are part of this category bring a great deal of stability to portfolio which a large proportion of equity, 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 6.44%.
This fund has an expense ratio of 0.87% as compared to category average of 0.95%.
Rydex Inverse Government Long Bond Strategy (RYJUX) seeks returns inversely proportional to that of the daily returns of the Long Treasury Bond for U.S. Treasury debt instruments. A major portion of assets of this fund is invested in derivatives. The government bond mutual has a five year annualized return of -8.03%.
Michael P. Byrum is the fund manager and has managed this fund since 2000.
Driehaus Active Income (LCMAX) seeks capital growth as well as current income. 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 5.63%.
As of December 2013, this government bond mutual fund held 214 issues, with 2.27% of its total assets invested in FNMA CMO 1.5%.
ProFunds Rising Rates Opportunity (RRPSX) invests with the intention of getting returns on a daily basis which is 1.25 times the inverse of that of the daily returns of the 30-Year U.S. Treasury Bond. The government bond mutual has a five year annualized return of -11.26%.
This government bond mutual fund has an expense ratio of 2.62% as compared to category average of 1.93%.
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 1.72%.
Douglas G. Kern is the fund manager and has managed this government bond fund since 1995.
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.
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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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Read the analyst report on PAGVX
Read the analyst report on RYJUX
Read the analyst report on LCMAX
Read the analyst report on RRPSX
Read the analyst report on HOSGX
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