Top 5 Highest Yielding Government Bond Mutual Funds (Feb. 2011)

Mutual funds investing in debt securities are among the most secure investment options which provide regular income while protecting capital invested. Funds of this nature bring a great deal of stability to portfolio which a large proportion of equity, while providing dividends more frequently than individual bonds. U.S government bonds funds usually invest in Treasury bills, notes and securities issued by government agencies. They are considered to be the safest in the bond fund category and are ideal options for the risk-averse investor.

Below we will share with you the 5 highest yielding Zacks #1 ranked government bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future.

Mutual Fund SEC Yield
Sit US Government Securities 3.47%
Oppenheimer US Governmenet A 3.08%
Legg Mason Western Asset Government Securities A 2.48%
Oppenheimer Limited-Term Government A 2.48%
Managers Intermediate Duration Government 2.32%

Sit US Government Securities (SNGVX) seeks to provide current income and safety of the capital invested. The fund only purchases U.S. government securities or instruments issued by its agencies or instrumentalities. A large share of its assets is invested in pass-through securities. The government bond mutual fund returned 4.91% over the last one year period.

The government bond mutual fund has a minimum initial investment of $5,000 and an expense ratio of 0.80% compared to a category average of 0.89%.

Oppenheimer US Government A (OUSGX) invests the majority of its assets in U.S. government debt securities. Debt securities issued or guaranteed by the U.S. Treasury constitute the fund’s major investments. It invests heavily in asset-backed derivatives such as collateralized mortgage obligations. The government bond mutual fund has a three year annualized return of 2.52%.

The Fund Manager is Peter A. Strzalkowski and he has managed this government bond mutual fund since 2009.

Legg Mason Western Asset Government Securities A (SGVAX) seeks high current return. The fund invests the majority of its assets in securities issued by the U.S. government and its agencies. U.S. Treasury securities and debt securities issued by federal agencies are some of the categories the fund invests in. The government bond mutual fund returned 9.01% over the last one year period.

As of September 2010, this government bond mutual fund held 594 issues, with 24.34% of its total assets invested in 0wp177652 Irs Usd R F 3.31100 Usd Cmm.

Oppenheimer Limited-Term Government A (OPGVX) invests the majority of its assets in domestic government securities, repurchase agreements on such instruments as well as synthetic instruments to manage risk. Not more than 20% of its assets are utilized to purchase mortgage-backed securities. The government bond mutual fund has a five year annualized return of 3.23%.

The government bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.70% compared to a category average of 0.89%.

Managers Intermediate Duration Government (MGIDX) seeks total return greater than the returns of major indices for asset backed securities. The majority of its assets are used to purchase bonds issued by the U.S. Government and its agencies. The government bond mutual fund has a ten year annualized return of 5.7%.

Daniel C. Dektar is the fund manager and has managed this government bond mutual fund since 1992.

To view the Zacks Rank and past performance of all government bond mutual funds, then click here.

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