Fixed-income securities are the preferred choice of investors who are ready to forgo capital growth for regular income flows. The expense involved in creating such a portfolio of bonds from different categories may be quite considerable. This is why most investors select mutual funds since they are a convenient and affordable method of investing in bonds. Diversified bond funds further reduce the risk involved by holding securities from different sectors. A downturn in any one sector therefore only has a partial effect on the fund’s fortunes.
Below we will share with you 5 top-ranked diversified 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 diversified bond mutual funds, investors can click here to see the complete list of funds.
PIMCO Diversified Income AÂ (PDVAXÂ -Â MF report) invests a major portion of its assets in a diversified portfolio of fixed income securities, which may be represented by derivative instrument. The fund may invest in both investment grade and high yield securities. However, at least 10% of its assets are rated below B by Moody’s, or equivalently rated by S&P (SPY) or Fitch. If unrated, then the ratings are determined by PIMCO. The diversified bond mutual fund returned 4.1% in the last one year period.
Curtis Mewbourne is the fund manager and has managed this diversified bond mutual fund since 2005.
Prudential Total Return Bond AÂ (PDBAXÂ -Â MF report) seeks total return. The fund invests a major portion of its assets in fixed-income securities, other than preferred stock, having a maturity of more than one year from the time of issue. It may invest a maximum of 30% of its assets in junk bonds, not rated below CCC, and up to 30% of its assets in foreign debt securities. The diversified bond mutual fund returned 7.2% in the last one year period.
