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Mutual Fund Commentary

Conservative investors prefer debt instruments not only because they safeguard the capital invested but also for the regular income flows they provide. Bonds bring a great deal of stability to an equity-heavy portfolio while providing dividends more frequently than individual bonds. U.S government bonds funds usually invest in Treasury bills, notes and securities issued by government agencies. They are considered to be the safest in the bond fund category and are ideal options for the risk-averse investor.

Below we will share with you 5 top rated government 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 government bond funds, investors can click here to see the complete list of funds.

Columbia Inflation Protected Securities A seeks total return greater than the long term inflation rate. The fund invests a large share of its assets in inflation indexed debt securities issued by the U.S. Treasury. The government bond mutual fund is non-diversified and has returned 7.50% over the last one year period.

The government bond mutual fund has a minimum initial investment of $5,000 and an expense ratio of 0.85% compared to a category average of 0.80%.

Franklin Real Return A (FRRAX - MF report) invests the majority of its assets in investment grade debt instruments. A maximum of 20% of its assets may be invested in debt instruments rated below investment grade. The government bond mutual fund returned 3.68% over the last one year period.

The Fund Manager is T. Anthony Coffey and he has managed this government bond fund since 2004.

Hussman Strategic Total Return (HSTRX - MF report) seeks total return over the long term. The fund invests heavily in fixed income instruments. These instruments are primarily securities issued by the U.S. Treasury, including bills, bond and notes. It may also invest in Treasury inflation-protected securities (TIPS). The government bond mutual fund returned 1.17% over the last one year period.

As of September 2012, this government bond mutual fund held 41 issues, with 12.46% of its total assets invested in US Treasury Note 0.75%.

PIMCO Real Return A (PRTNX - MF report) invests a large share of its assets in bonds issued by the domestic. and foreign governments and related agencies which provide returns higher than the inflation rate over a business cycle. It predominantly invests in securities rated investment grade. The government bond mutual fund returned 8.72% over the last one year period.

The government bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.85% compared to a category average of 0.80%.

John Hancock Funds2 Real Return Bond 1 (JIRRX - MF report) seeks high real return. The fund invests heavily in domestic and foreign government instruments that are inflation protected. A maximum of 10% of its assets may be invested in junk bonds. The government bond mutual fund returned 8.71% over the last one year period.

The Fund Manager is Mihir Worah and he has managed this government bond fund since 2008.

To view the Zacks Rank and past performance of all government 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.

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