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 real estate funds, investors can click here to see the complete list of funds.
PIMCO Income A (PONAX - Free Report) invests a minimum of 65% in Fixed Income Instruments that have different maturities including options, forwards and swaps. Also, a maximum of 50% is invested in below investment grade high-yield securities. However, these securities must have at least Caa rating by Moody’s or equivalent rating agencies. The diversified bond mutual fund returned 8.5% in the last one year period.
The diversified bond mutual fund has an expense ratio of 0.85% compared to a category average of 1.08%.
Hartford Strategic Income A (HSNAX - Free Report) seeks total return over the long run with current income. It invests in debt securities in different countries which Wellington Management Company, LLP believes will give a high total return. It invests in securities including junk bonds and investment-grade securities. The diversified bond mutual fund returned 5.6% in the last one year period.
As of August 2014, this diversified bond mutual fund held 654 issues, with -6.1% of its total assets invested in FNMA.
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 5.7% in the last one year period.
Jason Brady is the fund manager and she has managed this diversified bond mutual fund since 2007.
Federated Strategic Income A (STIAX - Free Report) seeks high current income. The fund invests in three major categories of fixed-income securities. These include domestic investment-grade, domestic noninvestment-grade corporate and investment graded and non-investment grade foreign investments. The diversified bond mutual fund returned 3.4% in the last one year period.
As of June 2014, this diversified bond mutual fund held 177 issues, with 46.65% of its total assets invested in High Yield Bond Portfolio.
Wells Fargo Advantage Diversified Income Builder A (EKSAX - Free Report) diversifies its portfolio by investing a large portion of its assets in both domestic and foreign securities. It primarily invests in corporate debt securities having junk ratings. It allocates 70-90% of its assets in debt securities and invests a maximum of 30% of its assets in equity securities. The diversified bond mutual fund returned 6.9% in the last one year period.
Margaret Patel is the fund manager and she has managed this diversified bond mutual fund since 2007.
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.