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4 Best Short-Term Investment-Grade Bond Mutual Funds to Buy
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Investors seeking to derive safe returns by investing in quality securities may consider short-term investment-grade mutual funds. These mutual funds invest in debt securities with maturity duration below five years. Though short-term bonds are believed to offer less returns than intermediate- and long-term ones, they have higher stability as shorter maturities are expected to reduce credit and interest rate risk.
Meanwhile, investment grade bonds are generally considered safer than those rated below investment grade, which are commonly known as "junk" bonds. Bonds that are rated 'AAA' and 'AA' (high credit quality) and 'A' and 'BBB' (medium credit quality) by bond rating firms, like Standard & Poor's, are usually regarded as investment-grade bonds. Also, bond funds are considered good investment propositions in a low-rate environment.
Below we will share with you four top ranked short-term investment-grade bond mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and expect these mutual funds to outperform their peers in the future. Investors can click here to see the complete list of funds.
BMO Short Term Income Advisor Fund Class Y seeks maximization of return, along with stability of income. MSINX invests the lion’s share of its assets in fixed income securities including corporate, asset-backed, and mortgage-backed securities, which are rated investment grade. BMO Short Term Income Advisor Fund Class Y returned 0.6% over the last three-month period.
MSINX has an expense ratio of 0.60% compared with the category average of 0.65%.
Principal Short-Term Income Fund Class P invests heavily in short-term bonds which are of high quality and in other fixed-income securities which are Baa3 or higher rated by Moody's Investors Service or BBB- or higher rated by S&P Global Ratings. Principal Short-Term Income Fund Class P returned 0.8% over the last three-month period.
John Friedl is one of the fund managers of PSTPX since 2010.
Deutsche Fixed Income Opportunities Fund Class A seeks to offer income consistent with total return. SDUAX invests a bulk of its assets in debt securities including securities issued by both domestic and foreign government establishments and corporates, tax-exempt municipal bonds, asset backed and mortgage-backed securities. Deutsche Fixed Income Opportunities Fund Class A returned 1.2% over the last three-month period.
SDUAX has an expense ratio of 1.01% compared with the category average of 1.32%.
Vanguard Short-Term Investment-Grade Fund Investor Shares (VFSTX - Free Report) invests in various high-quality fixed income securities that are rated either A3 or higher as well as medium-quality fixed income securities that are rated Baa1, Baa2 or Baa3. The fund invests primarily in short and intermediate-term investment-grade securities. Vanguard Short-Term Investment-Grade Fund Investor Shares returned 0.8% over the last three-month period.
As of December 2016, TMAFXheld 2203 issues, with 1.25% of its assets invested inUS Treasury Note 0.75%.
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4 Best Short-Term Investment-Grade Bond Mutual Funds to Buy
Investors seeking to derive safe returns by investing in quality securities may consider short-term investment-grade mutual funds. These mutual funds invest in debt securities with maturity duration below five years. Though short-term bonds are believed to offer less returns than intermediate- and long-term ones, they have higher stability as shorter maturities are expected to reduce credit and interest rate risk.
Meanwhile, investment grade bonds are generally considered safer than those rated below investment grade, which are commonly known as "junk" bonds. Bonds that are rated 'AAA' and 'AA' (high credit quality) and 'A' and 'BBB' (medium credit quality) by bond rating firms, like Standard & Poor's, are usually regarded as investment-grade bonds. Also, bond funds are considered good investment propositions in a low-rate environment.
Below we will share with you four top ranked short-term investment-grade bond mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and expect these mutual funds to outperform their peers in the future. Investors can click here to see the complete list of funds.
BMO Short Term Income Advisor Fund Class Y seeks maximization of return, along with stability of income. MSINX invests the lion’s share of its assets in fixed income securities including corporate, asset-backed, and mortgage-backed securities, which are rated investment grade. BMO Short Term Income Advisor Fund Class Y returned 0.6% over the last three-month period.
MSINX has an expense ratio of 0.60% compared with the category average of 0.65%.
Principal Short-Term Income Fund Class P invests heavily in short-term bonds which are of high quality and in other fixed-income securities which are Baa3 or higher rated by Moody's Investors Service or BBB- or higher rated by S&P Global Ratings. Principal Short-Term Income Fund Class P returned 0.8% over the last three-month period.
John Friedl is one of the fund managers of PSTPX since 2010.
Deutsche Fixed Income Opportunities Fund Class A seeks to offer income consistent with total return. SDUAX invests a bulk of its assets in debt securities including securities issued by both domestic and foreign government establishments and corporates, tax-exempt municipal bonds, asset backed and mortgage-backed securities. Deutsche Fixed Income Opportunities Fund Class A returned 1.2% over the last three-month period.
SDUAX has an expense ratio of 1.01% compared with the category average of 1.32%.
Vanguard Short-Term Investment-Grade Fund Investor Shares (VFSTX - Free Report) invests in various high-quality fixed income securities that are rated either A3 or higher as well as medium-quality fixed income securities that are rated Baa1, Baa2 or Baa3. The fund invests primarily in short and intermediate-term investment-grade securities. Vanguard Short-Term Investment-Grade Fund Investor Shares returned 0.8% over the last three-month period.
As of December 2016, TMAFXheld 2203 issues, with 1.25% of its assets invested inUS Treasury Note 0.75%.
To view the Zacks Rank and past performance of all short-term investment-grade bond mutual funds, investors can click here to see the complete list of funds.
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