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. Diversified bond funds further reduce the risk involved by holding securities from different sectors. A downturn in any one sector therefore only has a partial effect on the fund’s fortunes.
Below we will share with you 5 top rated diversified 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 real estate funds, investors can click here to see the complete list of funds.
T. Rowe Price Strategic Income (PRSNX) invests a major portion of its assets in income generating securities. It may invest a maximum of half of its assets in foreign debt instruments. It may also invest a maximum of 65% of its assets in securities that are rated below investment grade. The diversified bond mutual fund returned 6.5% in the last one year period.
The diversified bond mutual fund has an expense ratio of 0.66% compared to a category average of 1.05%.
DWS Unconstrained Income A (KSTAX) seeks total return. It invests mostly in fixed income securities issued by both domestic and foreign companies. It may invest all its assets in investment-grade fixed income securities or in junk bonds. The fund may also invest in emerging economies and other securities including floating rate debt securities and adjustable rate loans. The diversified bond mutual fund returned 5.5% in the last one year period.
As of August 2014, this diversified bond mutual fund held 612 issues, with 5.19% of its total assets invested in SPDR Barclays Convertible Secs ETF.
Virtus Multi-Sector Intermediate Bond A (NAMFX) invests a lion’s share of its assets in bonds of undervalued sectors using immense credit research. It diversifies its investment among 14 sectors in order to derive higher return with reduced risk. The diversified bond mutual fund returned 6.1% in the last one year period.
David L. Albrycht is the fund manager and has managed this diversified bond mutual fund since 1994.
Voya Global Bond Portfolio A (IOSAX) seeks high return with current income and capital growth. It invests a lion’s share of its assets in bonds all over the globe including that from developed and emerging economies. It invests in investment-grade instruments including corporate and government investment-grade bonds. The diversified bond mutual fund returned 1.9% in the last one year period.
As of June 2014, this diversified bond mutual fund held 435 issues, with 9.49% of its total assets invested in Voya Emerging Markets Hard Ccy Dbt P.
Columbia Strategic Income A (COSIX) invests in three categories of debt securities. These include U.S. government bonds that may include asset backed securities; foreign securities, including those issued from emerging markets, and corporate debt securities that may be rated below investment grade. The diversified bond mutual fund returned 5.7% in the last one year period.
Colin Lundgren is the fund manager and he has managed this diversified bond mutual fund since 2010.
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. Learn more about the Zacks Mutual Fund Rank in our Mutual Fund Center.
Read the analyst report on PRSNX
Read the analyst report on KSTAX
Read the analyst report on NAMFX
Read the analyst report on IOSAX
Read the analyst report on COSIX
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