Conservative investors prefer debt instruments not only because they safeguard the capital invested but also for the regular income flows they provide. Bonds bring a great deal of stability to an equity-heavy portfolio 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.
ProFunds Rising Rates Opportunity (RRPSX) seeks 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 fund invests in derivatives which taken together provide such returns. The government bond mutual returned 6.38% over the last one year period.
The government bond mutual fund has an expense ratio of 2.74% compared to a category average of 1.94%.
PIMCO Real Return A (PRTNX) invests in inflation-indexed bonds which are issued by the domestic and foreign government or their agencies. A maximum of 10% of its assets is invested in junk bonds which have a minimum rating of B. The non-diversified government bond mutual fund returned 3.68% over the last one year period.
As of March 2013, this government bond mutual fund held 858 issues, with 10.12% of its total assets invested in Fin Fut Euro$ Cme 03/14/16
Rydex Inverse Government Long Bond Strategy (RYJUX) seeks returns which is inversely proportional to the daily returns of the Long Treasury Bond for U.S. Treasury debt instruments. A major portion of assets is invested in derivatives. The government bond mutual fund returned 8.05% over the last one year period.
The Fund Manager is Michael P. Byrum and he has managed this government bond fund since 2000.
Franklin Real Return A (FRRAX) invests in investment grade bonds. Not more than 20% is invested in debt instruments rated below investment grade. A maximum of 25% can also invested in foreign securities. These include those denominated in foreign currencies as well as those denominated in U.S. dollars. The government bond mutual fund returned 3.84% over the last one year period.
The government bond mutual fund has an expense ratio of 0.90% compared to a category average of 0.81%.
Western Asset Mortgage Backed A (SGVAX) seeks a high return. The fund invests a large share of its assets in mortgage-backed securities issued by government backed Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) or Government National Mortgage Association (Ginnie Mae). The government bond mutual fund returned 8.67% over the last one year period.
The Fund Manager is Stephen Walsh and he has managed this government bond fund since 2006.
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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