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Bonds are the logical choice of investors who are willing to forgo capital growth for a regular income stream. The cost of individually purchasing bonds from various categories may become a particularly expensive proposition. This is why mutual funds are the most affordable method of investing in bonds. Diversified bond mutual funds further reduce the risk involved since their portfolios consist of securities from various classes and sectors. This ensures that any negative fluctuation in a specific sector only has a partial effect on the fund’s fortunes.
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.
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%.
The diversified bond mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.30% compared to a category average of 0.91%.
JPMorgan Core Bond A (PGBOX) 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.
As of November 2011, this diversified bond mutual fund held 3854 issues, with 3.06% of its total assets invested in Jpmorgan Liquid Assets Money Market Fund.
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.
Aberdeen Core Fixed Income A (PCDFX) 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%.
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%.
Fidelity Total Bond (FTBFX) 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.
Ford G. O'Neil is the fund manager and has managed this diversified bond mutual fund since 2004.
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.