Mutual funds having significant exposure to diversified bonds are excellent choices for investors seeking steady returns with a relatively low level of risk. Investing in funds, which maintain a portfolio of bonds issued across a wide range of market sectors, also reduces sector-specific risk.
Moreover, investing in diversified bond funds is preferred to individual bond investing, as building a portfolio of the second type may prove to be relatively more expensive. A higher level of liquidity also makes diversified bond funds more attractive.
Below we share with you four best-ranked diversified bond mutual funds. 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 diversified bond funds. Columbia Strategic Income Fund A ( COSIX Quick Quote COSIX - Free Report) invests in U.S. government bonds, mortgage backed securities, investment grade corporate bonds, inflation-protected securities, convertible securities as well as high yield instruments. COSIX seeks total return that includes current income and capital appreciation. Columbia Strategic Income A returned 7.6% over the past one year.
COSIX has an expense ratio of 1.03% as compared to the category average of 1.25%.
PIMCO Fixed Income SHares M ( FXIMX Quick Quote FXIMX - Free Report) seeks to maximize total return with capital preservation. FXIMX may invest 100% of its assets in mortgage- and other asset-backed securities that are believed to provide a fixed level of income. These securities include commercial mortgage-backed securities, collateralized mortgage obligations and mortgage pass-through securities. PIMCO Fixed Income SHares M returned 7.9% over the last one-year period.
David Braun is one of the fund managers of FXIMX since 2016.
Touchstone Active Bond Y ( TOBYX Quick Quote TOBYX - Free Report) invests the lion’s share of its assets in bonds including government as well as corporate debt securities, and mortgage-related securities. TOBYX may also invest a maximum of 20% of its assets in debt securities that are issued by foreign entities. Touchstone Active Bond Y returned 4.3% over the past one year.
TOBYX has an expense ratio of 0.65% as compared to the category average of 0.80%.
T. Rowe Price Spectrum Income Fund ( RPSIX Quick Quote RPSIX - Free Report) seeks a high level of current income. RPSIX generally invests in domestic and foreign bond funds, money market funds, and an income-oriented stock fund. The fund may invest in funds holding high-quality U.S. and non-U.S. bonds. It broadly diversifies its assets among T. Rowe Price mutual funds from specific market sections. The diversified bond mutual fund returned 8% in the last one-year period.
As of September 2016, RPSIX held 14 issues, with 19.52% of its assets invested in T. Rowe Price New Income.
To view the Zacks Rank and past performance of all diversified bond mutual funds, investors can
click here to see the complete list of diversified bond funds. Want key mutual fund info delivered straight to your inbox?
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