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.
Wasatch-Hoisington US Treasury (WHOSX - MF report) seeks return higher than the inflation rate over a business cycle. The fund invests at least 90% of its assets in U.S Treasury securities and repurchase agreements backed by such instruments. The fund also purchases long term U.S. Treasury Bonds. The government bond mutual fund returned 26.2% over the last one year period.
The government bond mutual fund has a minimum initial investment of $2,000 and an expense ratio of 0.75% compared to a category average of 0.83%.
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 19.41% over the last one year period.
The Fund Manager is David R. Glocke and he has managed this government bond fund since 2001.
ProFunds US Government Plus (GVPSX - MF report) seeks daily returns which are 1.25 times the daily price movement of the most recently issued Long Bond. The fund purchases domestic government bonds and derivatives that provide such daily returns. The government bond mutual fund returned 27.9% over the last one year period.
As of April 2012, this government bond mutual fund held 7 issues, with 21.26% of its total assets invested in US Treasury Bond 3.125%.
T. Rowe Price US Treasury Long-Term (PRULX - MF report) invests at least 85% of its assets in U.S Treasury securities. The fund targets the longer end of the yield curve with the portfolio weighted average maturity period forecasted in the range of 15 to 20 years. The government bond mutual fund returned 18.92% over the last one year period.
The government bond mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.55% compared to a category average of 0.83%.
Rydex Government Long Bond 1.2x Strategy (RYGBX - MF report) seeks returns which are 1.2x the returns of the long dated U.S Treasury Bonds. The fund invests in a variety of derivative instruments and U.S Government securities to match its investment objective. The government bond mutual fund returned 29.72% over the last one year period.
The Fund Manager is Ryan A. Harder and he has managed this government bond fund since 2008.
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.