Fixed-income securities are preferred by investors ready to forgo capital growth for regular income flows. The expense involved in creating such a portfolio of bonds from different categories can be considerable. This is why most investors select mutual funds since they are a convenient and affordable. Also, diversified bond funds reduce the risk involved by holding securities from different sectors. Therefore, a downturn in any one sector has a partial effect on the fund’s fortunes.
Below we share with you three 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.
Toreador Core Retail seeks long-term capital growth. TORLX invests mostly in domestic and foreign large-cap companies. The market capitalization of these companies is identical to those listed on the S&P 500 Index or the Russell 1000 Index. Toreador Core Retail has a three-year annualized return of 8.7%.
Paul Blinn is one of the fund managers of TORLX since 2006.
PIMCO Income A (PONAX - Free Report) invests a minimum of 65% of its assets in fixed income securities from a wide range of sectors. These securities may include options, futures contracts and swap agreements. PONAX may invest not more than half of its assets in securities that are rated below investment grade. PIMCO Income A has a three-year annualized return of 5.5%.
PONAX has an expense ratio of 0.85% compared to a category average of 0.99%.
Columbia Strategic Income C (CLSCX - Free Report) seeks total return that includes current income and capital appreciation. CLSCX invests in U.S. government bonds, investment grade corporate bonds, mortgage backed securities, inflation-protected securities, convertible securities as well as foreign government, sovereign and quasi-sovereign debt investments. Columbia Strategic Income C has a three-year annualized return of 2.7%.
As of December 2016, CLSCX held 974 issues, with 4.64% of its total assets invested in FNMA.
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.
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