Fixed-income securities are the preferred choice of investors who are ready to forgo capital growth for regular income flows. The expense involved in creating such a portfolio of bonds from different categories may be quite considerable. This is why most investors select mutual funds since they are a convenient and affordable method of investing in bonds. Diversified bond funds further reduce the risk involved by holding securities from different sectors. A downturn in any one sector therefore 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 real estate funds, investors can click here to see the complete list of funds.
Loomis Sayles Fixed Income (LSFIX - Free Report) seeks current income and preservation of capital. The fund invests most of its assets in fixed income securities. It may invest a maximum of 35% of its assets in below investment grade securities. Not more than 20% of its assets may be used to purchase common and preferred stocks. The fund may also invest in unrated fixed income securities. The diversified bond mutual fund returned 13.8% in the last one year period.
As of June 2014, this diversified bond mutual fund held 478 issues, with 3.55% of its total assets invested in US Treasury Note 0.375%.
Thornburg Strategic Income A (TSIAX - Free Report) invests in different income generating securities all over the globe which also include debt instruments. The asset allocation between debt instruments and stocks may vary from time to time. It invests in debt instruments irrespective of their quality and duration of maturity. The diversified bond mutual fund returned 9.8% in the last one year period.
The diversified bond mutual fund has an expense ratio of 1.25% compared to a category average of 1.08%.
Virtus Multi-Sector Intermediate Bond A (NAMFX - Free Report) seeks current income with capital preservation. The fund invests a lion’s share of its assets in bonds of undervalued sectors using immense credit research. It diversifies its investment among 14 sectors in order to derive higher return with reduced risk. The diversified bond mutual fund returned 9.6% in the last one year period.
David L. Albrycht is the fund manager and has managed this diversified bond mutual fund since 1994.
T. Rowe Price Strategic Income (PRSNX - Free Report) invests major portion of its assets in income generating securities. It may invest a maximum of half of its assets in foreign debt instruments. It may also invest a maximum of 65% of its assets in securities that are rated below investment grade. The diversified bond mutual fund returned 9.3% in the last one year period.
As of June 2014, this diversified bond mutual fund held 487 issues, with 9.8% of its total assets invested in T. Rowe Price Instl Floating Rate.
DWS Unconstrained Income A (KSTAX - Free Report) seeks total return. It invests mostly in fixed income securities issued by both domestic and foreign companies. It may invest all its assets in investment-grade fixed income securities or in junk bonds. The fund may also invest in emerging economies and other securities including floating rate debt securities and adjustable rate loans. The diversified bond mutual fund returned 8.5% in the last one year period.
The diversified bond mutual fund has an expense ratio of 1.00% compared to a category average of 1.08%.
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 in our Mutual Fund Center.