U.S. Markets closed

3 Potential Short-Term Government Bond Mutual Funds to Consider - Mutual Fund Commentary

Zacks Equity Research

A short-term government bond fund is a mutual fund that's limited, by its investment objectives and fund bylaws, to investing primarily in short-term obligations of the federal government or its agencies. Depending on the fund's definition, short-term can be up to five years. Meanwhile, mutual funds investing in government 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 portfolios with a large proportion of equity, while providing dividends more frequently than individual bonds. Hence, 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 3 potential short-term government bond mutual funds. Each has earned a Zacks #2 Rank (Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all short-term government bond funds, investors can click here to see the complete list of funds.

Western Asset Short-Term Bond A (SBSTX) invests a major potion of its assets in fixed income instruments that are categorized as "investment grade." The fund focuses on acquiring securities such as corporate debt securities, bank obligations and other securities that are affiliated by the US government or its entities. It may also invest a maximum of 25% of its assets in foreign securities that are denominated in the US dollar. The short-term government bond mutual fund has a three-year annualized return of 1.3%.

The fund has an expense ratio of 0.79% as compared to category average of 0.82%.

AMG Managers Short Duration Government (MGSDX) seeks high current income. The fund invests a lion’s share of its assets in bonds of the US government or its affiliates. It may also invest in other securities having characteristics identical to government bonds. It focuses on investing in securities of highest credit quality in order to minimize its risk. The short-term government bond mutual fund has a three-year annualized return of 0.7%.

As of January 2015, this fund held 517 issues with 5.48% of its assets invested in FNMA.

SEI Daily Income Trust Short-Duration Government A (TCSGX) generally invests 100% of its assets in obligations of the U.S. Treasury and obligations that are approved by the US government or by its agencies. These securities include mortgage-backed securities, and repurchase agreements. The fund may consider securities of agencies including the Federal National Mortgage Association (FNMA or Fannie Mae) and the Federal Home Loan Mortgage Corporation that are affiliated by the US government. The short-term government bond mutual fund has a three-year annualized return of 0.5%.

Michael F. Garrett is the fund manager and has managed this fund since 2003.

To view the Zacks Rank and past performance of all short-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.


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
 
Get Your Free (SBSTX): Fund Analysis Report
 
Get Your Free (MGSDX): Fund Analysis Report
 
Get Your Free (TCSGX): Fund Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research