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Mutual funds investing in debt securities are among the most secure investment options which provide regular income while protecting capital invested. Funds of this nature 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 the 5 highest yielding Zacks #1 ranked 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.

Mutual Fund Sec 30 Day Yield
Sentinel Total Return Bond A 2.83%
Oppenheimer Limited-Term Bond A 2.49%
Delaware Core Plus Bond A 2.26%
Putnam American Government Income A 2.25%
Direxion Monthly 7-10 Year Treasury Bear 2X Fund 1.90%
 
Sentinel Total Return Bond A (SATRX - Free Report) seeks high return from a combination of capital growth and current income. The fund invests predominantly in different kind of fixed-income securities regardless of its duration. Half of its assets may be invested in junk bonds. The government bond mutual fund returned 4.16% over the last one year period.

Jason M. Doiron is the fund manager and has managed this fund since 2010.

Oppenheimer Limited-Term Bond A (OUSGX - Free Report) invests mostly in corporate debt securities and domestic government securities. The majority of its assets are invested in bonds, while a maximum of 35% may be invested in high-yield junk bonds. The government bond mutual fund returned 1.17% over the last one year period.

As of December 2013, this government mutual fund held 607 issues with 5.84% of its total assets invested in FNMA 4% TBA.

Delaware Core Plus Bond A (DEGGX - Free Report) seeks long-term return. A maximum of 50% is invested in US investment grade debt securities. These may include US government-issued debt securities or high-quality corporate bonds, and mortgage and asset-backed securities. The government bond mutual fund returned 0.40% over the last one year period.

Paul A. Matlack is the fund manager and has managed this fund since 2012.

Putnam American Government Income A (PAGVX - Free Report) seeks substantial current income. A large share of the fund’s assets is utilized to purchase bonds and asset backed debt securities issued by the U.S. government and its agencies. It may also invest in derivatives. The government bond mutual fund returned 1.03% over the last one year period.

The government bond mutual fund has an expense ratio of 0.87% compared to a category average of 0.95%.

Direxion Monthly 7-10 Year Treasury Bear 2X Fund (DXKSX - Free Report) seeks to provide monthly returns which are directly the opposite of that obtained from NYSE 7-10 Year Treasury Bond Index’s monthly performance. A lion’s share of its assets is invested in securities that make up the index or indirectly provide exposure to the same. The government bond mutual fund returned -0.17% over the last one year period.

Paul Brigandi is the fund manager and has managed the fund since 2004.

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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