Investing in diversified bond funds is more 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.
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 Nuveen Preferred Securities & Income Fund NPSAX, PIMCO Fixed Income Shares: Series TE FXIEX and Ancora Income Fund Class I AAIIX. 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.
Nuveen Preferred Securities & Income Fund investsmost of its assets, along with borrowings, if any, in preferred and other income-producing investment-grade securities. A small portion of the assets is invested in companies that are principally engaged in financial services. NPSAX advisors may also invest in below-investment-grade securities.
Nuveen Preferred Securities & Income Fund has three-year annualized returns of 2.3%. As of the end of March 2022, NPSAX had 65.03% of its net assets invested in preferred stocks.
PIMCO Fixed Income SHares: Series TE invests most of its assets, along with borrowings, if any, in a portfolio of U.S. fixed-income instruments. These mostly include debt securities whose interest is exempted from federal income tax at the time of purchase according to the opinion of bond counsel for the issuer. FXIEX generally will not purchase bonds subject to the federal alternative minimum tax under normal circumstances.
PIMCO Fixed Income SHares: Series TE has three-year annualized returns of 1.5%. FXIEX has an expense ratio of 0.02% compared with the category average of 0.68%.
Ancora Income Fund Class I invests mostly in debt securities, preferred stocks, high dividend-bearing common shares, as well as common and preferred shares of closed-end investment companies with market capitalization of more than $500 million. AAIIX also invests in closed-end funds and convertible securities of large, small and mid-sized companies.
Ancora Income Fund Class I has three-year annualized returns of 2.1%. Kevin Gale has been the fund manager of AAIIX since May 2020.
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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