Fixed-income securities are the preferred choice of investors who are ready to forgo capital growth for regular income flows. The expense involved in creating such a portfolio of bonds from different categories may be quite considerable. This is why most investors select mutual funds since they are a convenient and affordable method of investing in bonds. Also, diversified bond funds further reduce the risk involved by holding securities from different sectors. Therefore, a downturn in any one sector only has a partial effect on the fund’s fortunes.
Below we share with you 4 best-rated diversified bond mutual funds. Each has earned a Zacks Mutual Fund Rank #1(Strong Buy) and we expect the funds to outperform their peers in the future. Investors can click here to see the complete list of diversified bond funds.
American Century Diversified Bond InvestorADFIX seeks income growth by investing mainly in investment-grade debt securities. ADFIX invests more than 80% of its assets in both high- and medium grade debt securities. The American Century Diversified Bond Investor fund has year-to-date, three-year and five-year annualized returns of 5.6%, 4.2% and 3.4%, respectively.
ADFIX has an expense ratio of 0.60% compared to the category average of 0.78%.
Fidelity Series Investment Grade Bond FFIBFX invests a large chunk of its assets in investment grade debt securities of varying maturities that may be represented by derivative instruments. FIBFX seeks growth of income. FIBFX invests in both domestic and foreign companies from different sectors. The Fidelity Series Investment Grade Bond F fund has year-to-date, three-year and five-year annualized returns of 6.5%, 4.3% and 3.6%, respectively.
Jeffrey Moore is one of the fund managers of FIBFX since 2008.
Voya Intermediate Bond W (IIBWX) seeks to provide maximum total return. IIBWX invests a major portion of its assets in investment-grade bonds including corporate, government and mortgage bonds. The Voya Intermediate Bond W fund has year-to-date, three-year and five-year annualized returns of 6.1%, 5% and 4.8%, respectively.
As of June 2016, IIBWX held 1042 issues with 6.55% of its assets invested in US Treasury N/B 1.1256/30/2021.
T. Rowe Price Global Multi-Sector Bond PRSNX invests the majority of its assets in bonds. PRSNX may invest a maximum half of its assets in non-U.S. dollar-denominated foreign debt securities. The fund may also invest up to 65% of its assets in securities and other holdings that are rated noninvestment-grade. PRSNX seeks high income along with capital appreciation. T. Rowe Price Global Multi-Sector Bond has year-to-date, three-year and five-year annualized returns of 7.8%, 4.5% and 4.3%, respectively.
PRSNX has an expense ratio of 0.71% compared to the category average of 0.95%.
To view the Zacks Rank and past performance of all diversified 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. Pick the best mutual funds with the Zacks 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
Get Your Free (IIBWX): Fund Analysis Report
Get Your Free (PRSNX): Fund Analysis Report
Get Your Free (ADFIX): Fund Analysis Report
Get Your Free (FIBFX): Fund Analysis Report
To read this article on Zacks.com click here.