For investors seeking a steady source of income along with safety of capital invested, bonds become a natural choice. The need to reduce risk via diversification necessitates holding bonds from different categories and classes. This may become an expensive affair, due to the costs of acquiring such instruments individually. Diversified bond funds are an affordable and convenient option for such investors. The presence of securities from different categories also means that a loss from any particular instrument only has a partial effect on the fund’s fortunes.
Below we will share with you the 5 highest yielding Zacks #1 ranked diversified bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform its peers in the future.
|Mutual Fund||SEC Yield|
|Virtus Multi-Sector Fixed Income A||8.77%|
|Putnam Diversified Income A||8.04%|
|Delaware Optimum Fixed Income A||6.79%|
|Federated Strategic Income A||5.83%|
|Oppenheimer Global Strategic Income A||5.75%|
David L. Albrycht is the fund manager and has managed this diversified bond mutual fund since 1994.
Putnam Diversified Income A (PDINX) invests 15% to 65% of its assets in government securities and domestic and foreign corporate bonds. The fund primarily purchases corporate bonds which are rated investment grade, but may also invest in securities of lower quality. The diversified bond mutual fund returned 18.39% in the last one year period.
The diversified bond mutual fund has a minimum initial investment of $500 and an expense ratio of 1.09% compared to a category average of 1.13%.
Delaware Optimum Fixed Income A (OAFIX) seeks high current income and may also seek capital appreciation. At least 80% of the fund’s assets are used to purchase fixed-income securities. It invests in government securities, corporate debt, municipal and asset-backed securities. The diversified bond mutual fund has a three year annualized return of 8.66%.
As of June 2010, this diversified bond mutual fund held 852 issues, with 6.52% of its total assets invested in United States Treas Nts 3.625%.
Federated Strategic Income A (STIAX) seeks high current income. The fund invests in three major categories of fixed-income securities. These include domestic securities rated below investment grade as well as those rated higher and foreign securities. The diversified bond mutual fund returned 14.2% in the last one year period.
Joseph M. Balestrino is the fund manager and has managed this diversified bond mutual fund since 1996.
Oppenheimer Global Strategic Income A (OPSIX) seeks a high level of current income. It invests the majority of its assets in securities issued by the US government and high yield domestic and foreign securities. The diversified bond mutual fund has a ten year annualized return of 6.91%.
The diversified bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.96% compared to a category average of 1.13%.
To view the Zacks Rank and past performance of all diversified bond mutual funds, then click here.