Government bond mutual funds are considered to be the safest class of investments in the bond fund category. These funds generally hold a portfolio of securities issued by the US Treasury and other government agencies which have negligible default risk. As a result, yields from these instruments are typically low along with low levels of associated risk. By holding widely diversified portfolios of these instruments, mutual funds contribute significantly to the safety associated with them.
Below we will share with you the 5 highest yielding Zacks #1 ranked 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.
|Mutual Fund||Sec 30 Day Yield|
|Western Asset Mortgage Backed Securities A||2.18%|
|LWAS/DFA Two-Year Government Portfolio||2.03%|
|Invesco Limited Maturity Treasury A2||2.01%|
|Hussman Strategic Total Return||2.00%|
|Homestead Short-Term Government||1.42%|
Western Asset Mortgage Backed Securities A (SGVAX) invests 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 fund returned 6.23% over the last one year period.
The government bond mutual fund has expense ratio of 0.99% compared to a category average of 0.89%.
LWAS/DFA Two-Year Government Portfolio (DFYGX) seeks maximum return. A large portion of its assets are invested in government securities which mature within a span of 2 years. It might also invest in futures and options contracts. The government bond mutual fund returned 0.21% over the last one year period.
As of June 2013, this government bond mutual fund held 7 issues, with 34.87% of its total assets invested in FHLBA 2.75%.
Invesco Limited Maturity Treasury A2 (SHTIX) invests most of its assets in US Treasuries and derivatives which have characteristics of similar nature. It predominantly invests in US Treasuries whose maturity period is maximum 5 years. US Treasuries usually include bonds, notes, bills and Treasury Inflation-Protected Securities (TIPS). The government bond mutual fund returned -0.17% over the last one year period.
The Fund Manager is Scott Case and he has managed this government bond fund since 2009.
Hussman Strategic Total Return (HSTRX) seeks capital growth and income on a long term basis. It invests maximum assets in US Treasuries and investment grade corporate bonds which are graded BBB or higher. Usually, the securities carry a maturity period between 1 year and 15 years. A maximum of 30% of investment is parked in Treasury zero-coupon bonds and Treasury interest strips. The government bond mutual fund returned -7.21% over the last one year period.
The government bond mutual fund has an expense ratio of 0.64% compared to a category average of 0.93%.
Homestead Short-Term Government (HOSGX) invests a large portion of its assets in fixed income securities which are backed by the US Government and have a maximum dollar-weighted average maturity of three years. The government bond mutual fund returned 1.56% over the last one year period.
The Fund Manager is Douglas G. Kern and he 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.
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 http://www.zacks.com/funds.
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