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.
JPMorgan Real Return A seeks high inflation protected return. It predominantly utilizes its assets to purchase Treasury Inflation Protected Securities (TIPS). It may also invest in derivatives. A maximum of 15% of its assets may be invested in inflation related securities issued by foreign governments. The government bond mutual fund returned 7.63% over the last one year period.
The government bond mutual fund has an expense ratio of 0.75% compared to a category average of 0.80%.
Direxion Monthly 10 Year Note Bull 2X (DXKLX - MF report) invests the majority of its assets in domestic government securities that may consist of index and financial securities to create long positions. It may also invest in short term securities with high credit quality. The government bond mutual fund returned 11.24% over the last one year period.
The Fund Manager is Paul Brigandi and he has managed this government bond fund since 2005.
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 12.23% over the last one year period.
As of September 2012, this government bond mutual fund held 18 issues, with 13.68% of its total assets invested in US Treasury Bond Stripped Prin Pmt.
American Century Zero Coupon (BTTTX - MF report) invests heavily in zero-coupon securities, mainly in U.S. Treasury securities and their equivalents. A maximum of 20% of its assets may be invested in AAA-rated zero-coupon U.S. government agency securities. The government bond mutual fund returned 11.24% over the last one year period.
The government bond mutual fund has an expense ratio of 0.56% compared to a category average of 0.82%.
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 12.70% 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/mutual-funds.php.