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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, investors can click here to see the complete list of funds.

JHancock Strategic Income A (JHFIX - MF report) focuses on investing in foreign corporate and government bonds, U.S. government bonds and domestic junk bonds. The fund may also purchase preferred securities and other varieties of debt securities. The diversified bond mutual fund returned 2.77% in the last one year period.

Daniel S. Janis, III is the fund manager and has managed this diversified bond mutual fund since 1999.

Franklin Strategic Income A (FRSTX - MF report) seeks appreciably high current income. A minimum of 65% of its assets may be utilized to purchase domestic and foreign debt instruments as well as emerging market bonds. The fund may invest substantially all of its assets in junk bonds. The diversified bond mutual fund returned 5.26% in the last one year period.

The diversified bond mutual fund has an expense ratio of 0.88% compared to a category average of 1.12%.

Loomis Sayles Fixed Income (LSFIX - MF report) invests the majority of its assets in debt securities. Not more than 35% of its assets may be utilized to purchase junk bonds. A maximum of 20% of its assets may be invested in equity. The diversified bond mutual fund returned 7.09% in the last one year period.

As of February 2012, this diversified bond mutual fund held 452 issues, with 2.30% of its total assets invested in Ontario Prov Cda 4.2%.

T. Rowe Price Spectrum Income (RPSIX - MF report) seeks high current income. The fund allocates its assets across a range of mutual funds from T Rowe Price. Under normal circumstances, it invests in domestic and foreign bond funds, a money market fund and an income yielding equity fund. The diversified bond mutual fund returned 6.03% in the last one year period.

Edmund M. Notzon, III is the fund manager and he has managed this diversified bond mutual fund since 1998.

Columbia Strategic Income A (COSIX - MF report) invests in three categories of debt securities. These include, U.S. government bonds and assets backed securities; foreign securities, including those issued from emerging markets and corporate debt rated below investment grade. The diversified bond mutual fund returned 7.48% in the last one year period.

The diversified bond mutual fund has an expense ratio of 1.00% compared to a category average of 1.12%.

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

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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