For investors looking at parking their funds with bonds, U.S. government securities are probably the safest possible investments in the category. Default risk is almost non-existent in this case, thought the trade-off is that the yields on such instruments are consequentially lower, a price for the quality of the investments. Moreover, interest payments on many treasury securities are exempt from local and state taxes. Consequentially, mutual funds holding government securities are the safest bond funds and a natural choice for the risk averse.
Below we will share with you 5 top rated 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 government bond funds, investors can click here to see the complete list of funds.
Fidelity Spartan Intermediate-Term Treasury Bond Index (FIBAX - MF report) invests a large share of its assets in securities which are part of the Barclays Capital 5-10 Year Treasury Bond index. The dollar-weighted average maturity period of the portfolio ranges from three to ten years. The government bond mutual fund returned 11.88% over the last one year period.
The government bond mutual fund has an expense ratio of 0.10% compared to a category average of 0.96%.
Rydex Government Long Bond 1.2x Strategy (RYGBX - MF report) seeks returns which are 120% of the price movement of U.S. long Treasury bonds. The majority of the fund’s assets are utilized to purchase U.S. government securities and derivatives. The government bond mutual fund returned 47.82% over the last one year period.
As of May 2012, this government bond mutual fund held 7 issues, with 78.18% of its total assets invested in US Treasury Bond 3%.
T. Rowe Price US Treasury Long-Term (PRULX - MF report) invests at least 85% of its assets in U.S Treasury securities. The balances of its funds are used to purchase other securities backed by the credit of the U.S. government. The government bond mutual fund returned 30.82% over the last one year period.
The Fund Manager is Brian J. Brennan and he has managed this government bond fund since 2003.
Dreyfus US Treasury Long-Term (DRGBX - MF report) seeks current income and capital growth. The fund invests a substantially high proportion of its assets in securities issued or guaranteed by the U.S. government or its agencies. The government bond mutual fund returned 30.94% over the last one year period.
The government bond mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.65% compared to a category average of 0.84%.
Vanguard Long-Term Treasury Investor (VUSTX - MF report) utilizes a large share of its assets to purchase securities issued by the U.S. Treasury, including bills, bond and notes. The fund aims at maintaining a weighted average maturity period of 15 to 30 years. The government bond mutual fund returned 31.62% over the last one year period.
The Fund Manager is David R. Glocke and he has managed this government bond fund since 2001.
To view the Zacks Rank and past performance of all 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 https://www.zacks.com/funds.