Back to top

5 Top Long-Term Government Bond Mutual Funds to Bet On

Read MoreHide Full Article

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 5 long-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 long-term government bond mutual funds, investors can click here to see the complete list of funds.

Fidelity Spartan Long-Term Treasury Bond Index Investor invests a major portion of its assets in securities listed in Barclays U.S. Long Treasury Bond Index. It uses statistical sampling methodology to give returns that are same as the Barclays U.S. Long Treasury Bond Index. It generally maintains a dollar-weighted average maturity of minimum 10 years. This government bond mutual fund returned 27.2% over the last one year period.

The fund has an expense ratio of 0.2% as compared to category average of 0.67%.

Wasatch-Hoisington US Treasury (WHOSX - Free Report) seeks both capital appreciation and current income. The fund invests a lion’s share of its assets in U.S. Treasury securities and also in repurchase agreements collateralized by such securities. The average maturity period of the fund’s portfolio is modified according to HIMCO's assessment of yearly trends in both domestic and global economic scenarios. This government bond mutual fund returned 35.2% over the last one year period.

Van Hoisington is the fund manager and has managed this fund since 1996.

Dreyfus US Treasury Long-Term invests a majority of its assets in U.S. Treasury instruments. It may also invest in other instruments which are approved by the domestic government or issued by its entities. The fund generally has a duration of more than or equal to 7.5 years and a dollar-weighted average portfolio maturity of at least minimum of 10 years. The fund seeks total return with capital growth and current income. This government bond mutual fund returned almost 25% over the last one year period.

The fund has an expense ratio of 0.65% as compared to category average of 0.67%.

Vanguard Long-Term Treasury (VUSTX - Free Report) seeks high level of current income. The fund invests a large share of its assets in U.S. Treasury securities such as bills and bonds. It aims to have an average weighted maturity period between 15 to 30 years. This government bond mutual fund returned 27.1% over the last one year period.

As of September 2014, this fund held 42 issues with 9.86% of its assets invested in US Treasury Bond 2.75%.

Strategy Investor (RYGBX - Free Report) invests largely in U.S. government backed fixed income instruments as well as derivative instruments such as future contracts, swaps and options. It seeks 1.2 times the return of daily price movement of the Long Treasury Bond for U.S. government instruments. This non-diversified government bond mutual fund returned 40% over the last one year period.

The fund has an expense ratio of 0.97% as compared to category average of 1.47%.

To view the Zacks Rank and past performance of all long-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 at www.zacks.com/funds/mutual-funds.

Published in