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Mutual Fund Commentary

Diversified bond funds provide investors with a convenient and affordable option to hold a portfolio of bonds from different economic sectors. The costs incurred to create a portfolio of individual bonds would be significantly higher than investing in this class of funds. The associated risk also undergoes a decline since volatility in a specific sector has only a partial effect on the fund’s fortunes. The opportunity to reinvest the income generated and a relatively higher level of liquidity also make them secure and attractive investments.

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 diversified bond funds, then click here.

Fidelity Total Bond (FTBFX - MF report) seeks high current income. The fund utilizes the majority of its assets to purchase a wide range of debt securities and related repurchase agreements. The diversified bond mutual fund returned 5.48% in the last one year period.

The diversified bond mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.45% compared to a category average of 0.91%.

Aberdeen Core Fixed Income A (PCDFX - MF report) invests a large share of its assets in a wide range of fixed-income securities. The fund invests across a multitude of asset classes, such as domestic and foreign government securities, as well as corporate and municipal obligations among others. The diversified bond mutual fund has a three year annualized return of 6.69%.

J. Gagnier is the fund manager and has managed this diversified bond mutual fund since 2010.

T. Rowe Price U.S. Bond Enhanced Index (PBDIX - MF report) seeks to mimic the total return performance of the domestic investment grade bond market. The fund of invests the majority of its assets in bonds which are included in the Barclays Capital U.S. Aggregate Index. The diversified bond mutual fund has a ten year annualized return of 5.27%.

As of September 2011, this diversified bond mutual fund held 1073 issues, with 4.01% of its total assets invested in US Treasury Bond 1.75%.

JPMorgan Core Bond A (PGBOX - MF report) invests the majority of its assets in debt securities with intermediate to long term maturity periods. The average weighted maturity period of the fund’s portfolio varies between four to twelve years. The diversified bond mutual fund returned 5.11% in the last one year period.

The diversified bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.74% compared to a category average of 0.91%.

Vanguard Total Bond Market Index (VBMFX - MF report) seeks to match the performance of the Barclays Capital U.S. Aggregate Float Adjusted Index. The fund has an average dollar-weighted maturity period which varies between five to ten years. The diversified bond mutual fund has a five year annualized return of 6.63%.

Kenneth Volpert is the fund manager and has managed this diversified bond mutual fund since 1992.

To view the Zacks Rank and past performance of all diversified bond mutual funds, then click here.

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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