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Mutual funds having significant exposure to diversified bonds are excellent choices for investors seeking steady returns with a relatively low level of risk. Investing in funds that maintain a portfolio of bonds issued across a wide range of market sectors, also reduces sector-specific risk.
Moreover, investing in diversified bond funds is preferred to individual bond investing, as building a portfolio of the second type may prove relatively more expensive. A higher level of liquidity also makes diversified bond funds more attractive.
Below we share with you three top-ranked diversified bond mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of diversified bond funds.
Morgan Stanley (NYSE:MS) Global Fixed Income Opportunities A DINAX seeks growth of income. The fund invests a large chunk of its assets in fixed-income securities. DINAX may also invest around 65% of its assets in any particular one market segment or asset class. It may also invest not more than one-fifth of its assets in public bank loans issued by financial institutions, including banks. Morgan Stanley Global Fixed Income Opportunities A has one-year annualized returns of 6.3%.
As of December 2017, DINAX held 523 issues, with 7.95% of its assets invested in Us Ultra Bond Cbt Mar18 Xcbt 20180320.
Deutsche Unconstrained Income S KSTSX seeks growth of returns. KSTSX invests primarily in fixed income securities of both domestic and foreign companies and governments. The fund may invest up to all its assets in fixed income securities that are rated investment-grade or lower. Deutsche Unconstrained Income S has returned 3.7% in the last one-year period.
KSTSX has an expense ratio of 0.86% compared with the category average of 1.02%.
PIMCO Income Fund D PONDX invests the lion’s share of its assets in a multi-sector portfolio of fixed income instruments such as forwards or derivatives such as options, futures contracts or swap agreements. PONDX may also invest almost half of its assets in high-yield securities that are rated lower than investment grade by S&P, Fitch or Moody's. The fund seeks maximization of income along with growth of capital. PIMCO Income Fund D has returned 5.2% over the last one-year period.
Alfred Murata is one of the fund managers of PONDX since 2013.
To view the Zacks Rank and past performance of all diversified bond mutual funds, investors can click here to see the complete list of diversified bond funds.
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