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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, investors can click here to see the complete list of funds.
MFS Strategic Income A (MFIOX - MF report) invests the majority of its assets in debt securities of different kinds. The fund seeks to acquire domestic and foreign government securities, asset backed instruments as well as emerging market securities. The diversified bond mutual fund returned 6.02% in the last one year period.
The diversified bond mutual fund has an expense ratio of 1.05% compared to a category average of 1.12%.
MainStay Flexible Bond Opportunities A (MASAX - MF report) seeks current income and substantial overall return. At least 65% of its assets are invested in domestic and foreign debt or related securities. It may also utilize up to 30% of its assets to purchase common and preferred stock, rights and warrants. The diversified bond mutual fund returned 4.86% in the last one year period.
As of February 2012, this diversified bond mutual fund held 401 issues, with 1.76% of its total assets invested in U.S. Treasury Notes 1.25%.
Federated Strategic Income A (STIAX - MF report) invests in three major categories of fixed-income securities. These include domestic securities rated below investment grade as well as those rated higher and foreign securities. Not more than 50% of its assets may be invested in any single category. The diversified bond mutual fund returned 7.12% in the last one year period.
Joseph M. Balestrino is the fund manager and has managed this diversified bond mutual fund since 1996.
Virtus Multi-Sector Fixed-Income A (NAMFX - MF report) seeks current income and preservation of capital. The fund utilizes at least 80% its assets to purchase a wide range of fixed income securities. It purchases U.S. government securities, investment-grade as well as high yield domestic debt securities. The diversified bond mutual fund returned 5.68% in the last one year period.
The diversified bond mutual fund has an expense ratio of 1.16% compared to a category average of 1.12%.
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.
Laura Ostrander is the fund manager and he has managed this diversified bond mutual fund since 2000.
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.