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3 Short-Term Government Bond Mutual Funds for Steady Growth

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A short-term government bond fund is a mutual fund that is limited by its investment objectives and fund bylaws to invest primarily in short-term obligations of the federal government or its agencies. Depending on the fund’s definition, the short term can be up to five years.

Mutual funds investing in government debt securities are among the most secure investment options that provide regular income while protecting the capital invested. Funds that are part of this category bring a great deal of stability to a portfolio with a large proportion of equity. They pay out dividends more frequently than individual bonds. Hence, these are considered the safest in the bond fund category and are ideal options for risk-averse investors.

Below, we share with you three top-ranked short-term government bond mutual funds, namely PGIM Short Duration High Yield Income Fund (HYSAX - Free Report) , Lord Abbett Short Duration Income Fund (LALDX - Free Report) and GMO U.S. Treasury Fund (GUSTX - Free Report) . Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds.

PGIM Short Duration High Yield Income Fund invests the majority of its assets in a diversified portfolio of high-yield fixed-income instruments that are below investment grade with varying maturities and other similar investments. HYSAX has returned 1.9% over the past three years.

Robert Cignarella has been one of the fund managers of HYSAX since 2014.

Lord Abbett Short Duration Income Fund seeks a high level of income by investing primarily in various types of short-duration debt securities. LALDX invests the majority of its net assets in investment-grade debt securities, securities issued or guaranteed by the U.S. government, and inflation-linked investments. The fund has returned 0.1% over the past three years.

As of May 2022, LALDX has 77.6% of its assets invested in TOTAL MISC BONDS.

GMO U.S. Treasury Fund invests the majority of its assets in Direct U.S. Treasury Obligations and repurchase agreements collateralized by these obligations. GUSTX usually maintains an estimated interest rate duration of one year or less for its portfolio. The fund has returned 0.5% over the past three years.

GUSTX has an expense ratio of 0.02% compared with the category average of 0.64%.

To view the Zacks Rank and the past performance of all short-term government bond mutual funds, investors can click here to see the complete list of short-term government bond mutual funds.

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