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. Also, 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-rated 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.
Nuveen Preferred Securities AÂ (NPSAXÂ -Â MF report) seeks high level of current income. NPSAX invests a major portion of its assets in preferred securities. The advisor invests a minimum 25% of its assets in the preferred securities of companies primarily involved in financial services. NPSAX invests a minimum half of its assets in securities rated investment grade. The Nuveen Preferred Securities A is non-diversified fund and has returned 4.4% over the past one year.
NPSAX has an expense ratio of 1.07% as compared to category average of 1.38%.
Columbia Strategic Income AÂ (COSIXÂ -Â MF report) invests in three categories of debt securities. These include U.S. government bonds that may include asset backed securities; foreign securities, including those issued from emerging markets, and corporate debt securities that may be rated below investment grade. Columbia Strategic Income A has returned almost 2% in the last one year period.
Colin Lundgren is the fund manager and has managed COSIX since 2010.
Toreador Core Retail (TORLX - MF report) seeks long-term capital growth and uses options to hedge its portfolio from risks. TORLX invests mostly in domestic and foreign large-cap companies. The market capitalizations of these companies are identical to those listed in the S&P 500 Index or the Russell 1000 Index. The Toreador Core Retail has returned 8.2% over the past one year.
