Investing in diversified bond funds is preferred more 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.
Moreover, 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.
Below, we share with you three top-ranked diversified bond mutual funds, namely PIMCO Fixed Income Shares: Series R FXIRX, Ave Maria Bond Fund AVEFX and BBH Limited Duration Fund Class N BBBMX. 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 funds.
PIMCO Fixed Income Shares: Series R seeks maximum real return along with preservation of real capital by investing most of its assets along with borrowings, if any, in fixed-income instruments, including inflation-indexed bonds issued by both governments and corporations, treasury inflation-protected securities (TIPS), corporate-debt securities, and convertible securities and corporate commercial paper. FXIRX invests in a portfolio of U.S. and foreign issuers.
PIMCO Fixed Income Shares: Series R has three-year annualized returns of 3.6%. As of the end of March 2022, FXIRX had 23.82% of its assets invested in U.S. treasury inflation-protected securities.
Ave Maria Bond Fund invests most of its assets along with borrowings, if any, in investment-grade debt securities issued by the U.S. government and its agencies, corporations, municipalities and money market instruments. AVEFX invests a small portion of its assets in equity securities, preferred stocks, convertible securities, and common stocks paying dividends of domestic or foreign issuers irrespective of its market capitalization.
Ave Maria Bond Fundhas three-year annualized returns of 2.6%. AVEFX has an expense ratio of 0.43% compared with the category average of 0.64%.
BBH Limited Duration Fund Class N seeks maximum total return along with preservation of capital by investing in a diversified portfolio of fixed-income instruments like asset-backed securities, notes and bonds issued by corporations and financial institutions and government agencies and government-guaranteed issuers. BBBMX invests in both U.S. and foreign issues.
BBH Limited Duration Fund Class Nhas three-year annualized returns of 0.9%. Andrew P. Hofer has been one of the fund managers of BBBMX since February 2011.
To view the Zacks Rank and the past performance of all diversified bond mutual funds, investors can click here to see the complete list of diversified bond mutual funds.
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