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Mutual Fund Commentary

Mutual funds investing in debt securities are among the most secure investment options which provide regular income while protecting capital invested. Funds which are part of this category bring a great deal of stability to portfolio which a large proportion of equity, 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.

Franklin Real Return A (FRRAX - MF report) seeks total return higher than the average rate of inflation. The fund 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 has a three year annualized return of 1.26%.

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

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. The government bond mutual fund has a three year annualized return of 8.57%.

As of December 2012, this government bond mutual fund held 903 issues, with 10.63% of its total assets invested in Fin Fut Euro$ Cme 03/14/16.

Western Asset Mortgage Backed Securities A (SGVAX - MF report) seeks a high level of current return. The fund invests the majority of its assets in mortgage backed securities. These may be issued by agencies such as the Government National Mortgage Association (Ginnie Mae). The government bond mutual fund has a three year annualized return of 7.15%.

The government bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.99% compared to a category average of 0.97%.

Hussman Strategic Total Return (HSTRX - MF report) 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 has a three year annualized return of 3.34%.

The Fund Manager is John P. Hussman and he has managed this government bond fund since 2002.

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 has a three year annualized return of 8.83%.

The government bond mutual fund has an expense ratio of 0.81% compared to a category average of 0.82%.

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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