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 over 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, namely PGIM Absolute Return Bond PADAX, Goldman Sachs Strategic Income Fund GSZAX and DWS Short Duration DBPIX. 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.
PGIM Absolute Return Bond fund seeks positive returns regardless of the market conditions by investing most of its assets along with borrowings, if any, in debt securities and investments that provide exposure to bonds. PADAX advisors may also invest in debt securities rated below investment or junk bonds.
PGIM Absolute Return Bond fund has three-year annualized returns of 3.3%. As of the end of January 2024, PADAX had 45.5% of its assets invested in Miscellaneous Bonds.
Goldman Sachs Strategic Income Fund invests most of its assets in a diversified portfolio of domestic and foreign investment grade and non-investment grade fixed-income securities. GSZAX advisors generally invest in U.S. and non-U.S government sovereign debt securities, agency securities, corporate debt securities, privately issued adjustable-rate and fixed-rate mortgage-backed securities, asset-backed securities, custodial receipts, municipal securities, loan participations and loan assignments and convertible securities.
Goldman Sachs Strategic Income Fund has three-year annualized returns of 2.9%. GSZAX has an expense ratio of 1.04%.
DWS Short Duration fund invests mostly in fixed-income securities rated within the top four credit rating categories by nationally recognized credit rating agencies. DBPIX advisors invest in securities with varying maturities.
DWS Short Duration fund has three-year annualized returns of 1.2%. Jeff Morton has been one of the fund managers of DBPIX since the end of August 2017.
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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