Government bond mutual funds are considered to be the safest class of investments in the bond fund category. These funds generally hold a portfolio of securities issued by the US Treasury and other government agencies that have negligible default risk. As a result, yields from these instruments are typically low, as are the levels of associated risk. By holding widely diversified portfolios of these instruments, mutual funds contribute significantly to the safety associated with them.
Below we will share with you 3 top rated short-term 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 short-term government bond mutual funds, investors can click here to see the complete list of funds.
American Funds Short-Term Tax-Exempt Bond A (ASTEX - Free Report) invests a large portion of its assets in securities that are exempt from regular federal income tax. The fund invests not more than 20% of its assets in securities that are subject to federal alternative minimum tax. It mostly invests in municipal bonds having rating AA- or better. Its combined portfolio has a dollar-weighted average maturity of not more than three years. The short-term government bond mutual fund has a three year annualized return of 1%.
The short-term government bond mutual fund has an expense ratio of 0.58% compared to a category average of 0.7%.
API Efficient Frontier Income A (APIUX - Free Report) seeks current income with limited credit risk. The fund invests in both equity and debt securities to cash in attractive investment opportunities. If required, the advisor may sell or redeem shares of the underlying fund. The short-term government bond mutual fund has a three year annualized return of 6.9%.
As of September 2014, this government bond mutual fund held 297 issues, with 2.26% of its total assets invested in AdvisorShares Peritus High Yield ETF.
Lord Abbett Short Duration Income A (LALDX - Free Report) invests a minimum of 65% of its assets in investment grade debt securities. These may include corporate debt securities of U.S. issuers and non-U.S. issuers denominated in U.S. dollars, mortgage-backed securities, U.S. government securities and inflation-related investments. It seeks appreciably high level of income and preservation of capital. The short-term government bond mutual fund has a three year annualized return of 3.2%.
The short-term government bond mutual fund has an expense ratio of 0.58% compared to a category average of 0.82%.
To view the Zacks Rank and past performance of all short-term 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 in our Mutual Fund Center.