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.
AMG Managers Intermediate Duration Government (MGIDX) invests majority of its assets in debt securities of domestic government or other agencies authorized by the government. It invests in securities having impressive credit quality to reduce risk. The government bond mutual fund returned 3.37% over the last one year period.
The fund has an expense ratio of 0.91% as compared to category average of 0.95%.
Sentinel Total Return Bond A (SATRX) seeks high return from a combination of capital growth and current income. The fund invests predominantly in different kind of fixed-income securities regardless of its duration. Half of its assets may be invested in junk bonds. The government bond mutual fund returned 5.01% over the last one year period.
Jason Doiron is the fund manager and has managed this fund since 2010.
Franklin Real Return A (FRRAX) invests in purchasing investment grade debt instruments. A maximum of 20% of its assets may be invested in junk bonds. Additionally, a minimum of 25% is also invested in foreign securities which may be denominated in domestic and foreign currencies. The government bond mutual fund returned 2.26% over the last one year period.
As of March 2014, this fund held 174 issues with 12.95% of its assets invested in US Treasury TIP.
Lord Abbett Income A (LAGVX) seeks high return along with capital preservation. A minimum of 65% of its assets is invested in debt securities backed by the U.S. Government. Investments are also made in derivatives such as futures, options and swaps. The government bond mutual fund returned 4.60% over the last one year period.
The fund has an expense ratio of 0.78% as compared to category average of 0.86%.
Hussman Strategic Total Return (HSTRX) invests mainly in fixed-income securities including U.S. Treasury Bonds, U.S. Treasury Strips and investment grade corporate debt having BBB rate or more. A maximum of 30% will be invested in Treasury interest Strips and zero-coupon bonds. The maturity period of its portfolio is usually between 1 year and 15 years. The government bond mutual fund returned 2.28% over the last one year period.
John P. Hussman is the fund manager and has managed this fund since 2002.
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.
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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.
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