Conservative investors prefer debt instruments not only because they safeguard the capital invested but also for the regular income flows they provide. Bonds bring a great deal of stability to an equity-heavy portfolio while providing dividends more frequently than individual bonds. U.S government bonds funds usually invest in Treasury bills, notes and securities issued by government agencies. They are considered to be the safest in the bond fund category and are ideal options for the risk-averse investor.
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.
Lord Abbett Income A (LAGVX - MF report) seeks high current income. The fund invests a minimum of 65% of its assets in investment grade debt instruments. These instruments may include securities that are backed by the U.S. government. It may also invest in derivative instruments. The government bond mutual fund returned 9.37% over the last one year period.
The Fund Manager is Andrew A. O'Brien and he has managed this government bond fund since 1998.
Western Asset Mortgage Backed Securities A (SGVAX - MF report) invests the majority of its assets in mortgage backed securities. These may be issued by agencies such as the Government National Mortgage Association (Ginnie Mae) as well as government sponsored agencies. The government bond mutual fund returned 6.21% over the last one year period.
The government bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.99% compared to a category average of 0.97%.
Homestead Short-Term Government (HOSGX - MF report) seeks current income. The fund invests a large share of its assets in fixed income instruments. It invests predominantly in domestic treasury securities and instruments issued by agencies of the U.S. government. The government bond mutual fund returned 4.02% over the last one year period.
As of December 2012, this government bond mutual fund held 194 issues, with 4.28% of its total assets invested in Overseas Private Invt Corp U S Govt Gtd.
Hussman Strategic Total Return (HSTRX - MF report) invests heavily in fixed income instruments. These instruments are primarily securities issued by the U.S. Treasury, including bills, bond and notes. It may also invest in Treasury inflation-protected securities (TIPS). The government bond mutual fund returned -1.80% over the last one year period.
The Fund Manager is John P. Hussman and he has managed this government bond fund since 2002.
John Hancock Funds2 Real Return Bond 1 (JIRRX - MF report) seeks high real return. The fund invests heavily in domestic and foreign government instruments that are inflation protected. A maximum of 10% of its assets may be invested in junk bonds. The government bond mutual fund returned 5.66% over the last one year period.
The government bond mutual fund has an expense ratio of 0.81% compared to a category average of 0.82%.
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.