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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.

Ivy Bond A (IBOAX - MF report) invests the majority of its assets in a wide range of debt securities rated investment grade. The fund’s portfolio consists of domestic corporate securities and those backed by assets, U.S. government bonds and debt instruments of domestic banks. The diversified bond mutual fund returned 6.47% in the last one year period.

The diversified bond mutual fund has a minimum initial investment of $500 and an expense ratio of 1.11% compared to a category average of 0.92%.

Lord Abbett Core Fixed Income A (LCRAX - MF report) seeks capital growth and current income. The fund seeks to acquire U.S. government securities, investment grade domestic and foreign securities, asset backed instruments, senior loans and derivatives. The diversified bond mutual fund returned 7.38% in the last one year period.

As of March 2012, this diversified bond mutual fund held 401 issues, with 10.42% of its total assets invested in U.S. Treasury Note 0.875%.

Optimum Fixed Income A (OAFIX - MF report) invests the majority of its assets in fixed-income securities. The fund purchases a wide range of government securities, corporate debt, municipal and asset-backed securities. The weighted average maturity period of the fund varies between five to ten years. The diversified bond mutual fund returned 6.67% in the last one year period.

Paul Grillo is the fund manager and has managed this diversified bond mutual fund since 2003.

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 6.87% 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 0.92%.

RidgeWorth Total Return Bond A (CBPSX - MF report) primarily purchases securities rated investment grade by at least one domestic securities rating firm. Not more than 20% of its assets are utilized to purchase high-yield debt securities rated investment grade. The diversified bond mutual fund returned 8.86% in the last one year period.

Adrien Webb is the fund manager and he has managed this diversified bond mutual fund since 2002.

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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