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3 Short-Term Government Bond Mutual Funds for Steady Returns

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A short-term government bond fund is a mutual fund that is limited by its investment objectives and fund bylaws to invest primarily in short-term obligations of the federal government or its agencies. Depending on the fund’s definition, the short term can be up to five years.

Mutual funds investing in government debt securities are among the most secure investment options that provide regular income while protecting the capital invested. Funds that are part of this category bring a great deal of stability to a portfolio with a large proportion of equity. They pay out dividends more frequently than individual bonds. Hence, these are considered the safest in the bond fund category and are ideal for risk-averse investors.

Below, we share with you three top-ranked short-term government bond mutual funds — Empower Short Duration Bond Investor (MXSDX - Free Report) , Vanguard Short-Term Federal Fund Investor (VSGBX - Free Report) and Payden US Government (PYUSX - Free Report) . Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds.

Empower Short Duration Bond Investor invests most of its assets in investment-grade bonds. MXSDX advisors actively manage a portfolio of corporate bonds, asset-backed securities, commercial and residential mortgage-backed securities, U.S. treasuries and agency securities. The fund has returned 2% over the past five years.

As of March 2023, MXSDX had 59.5% of its assets invested in TOTAL MISC BONDS.

Vanguard Short-Term Federal Fund Investor primarily invests in short-term bonds issued or guaranteed by the U.S. government. Many of these bonds are not backed by the full faith and credit of the U.S. government. The fund has returned 1.1% over the past five years.

Brian W. Quigley has been one of the fund managers of VSGBX since 2015.

Payden US Government invests the majority of its assets in U.S. government obligations. These include treasury bills, notes, bonds and mortgage-backed securities. The fund has returned 0.9% over the past five years.

PYUSX has an expense ratio of 0.43%.

To view the Zacks Rank and the past performance of all short-term government bond mutual funds, investors can click here to see the complete list of short-term government bond mutual funds.

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