Diversified bond funds provide investors the benefit of holding bonds across sectors at lower costs. This is particularly significant if the expense of holding a set of individual bonds is considered. This class of bond funds is also the clear choice for bond categories with a higher level of credit risk such as corporate bonds, high yield bonds and emerging market bonds. In this case the benefits of diversification clearly exceed the expense involved in holding such a fund. In addition, the opportunity to reinvest the regular income provided by these instruments and a higher level of liquidity make them secure and attractive investments
Below we will share with you 5 top rated diversified bond funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all diversified bond funds, then click here.
MainStay Diversified Income A (MASAX) seeks total return by investing a large share of its assets in domestic and foreign debt or related securities. Up to 30% of its assets may be used to purchase common and preferred stocks, rights and warrants. The diversified bond fund returned 27.95% in 2009 and has a three year annualized return of 5.59%.
The diversified bond fund has an expense ratio of 1.19% compared to a category average of 1.17%.
American Beacon High Yield Bond (AHYPX) invests the majority of its assets in domestic and foreign high yield bonds. These bonds are usually private and public debt instruments rated below investment grade. It is a no load fund.
The diversified bond fund returned 28.49% over the last one year period.
Pioneer Strategic Income A (PSRAX) seeks high current income. At least 80% of its assets are invested in debt securities. It focuses on debt securities issued by the U.S. government and related agencies, domestic and foreign corporate debt and asset backed securities. The fund has a ten year annualized return of 7.67%.
The Fund Manager is Kenneth J. Taubes and he has managed this diversified bond fund since 1999.
Eaton Vance Diversified Income A (EADDX) invests in securities of varying credit quality, including junk bonds. It invests in both domestic and foreign securities, including high yield corporate debt and asset based securities. Up to 15% of its assets may be used to purchase equity and other assets. The diversified bond fund returned 29.86% over the last one year period.
As of December 2009, this diversified bond fund held 1192 issues, with 0.74% of its total assets invested in Community Health Systems, Inc.
Delaware Extended Duration Bond A (DEEAX) seeks total return by investing in corporate bonds with credit ratings in the four highest categories. Up to 20% of its assets may be used to purchase high-yield corporate bonds. The fund has a five year annualized return of 6.31%.
Roger A. Early is the fund manager and has managed this diversified bond fund since 2007.
To view the Zacks Rank and past performance of all diversified bond funds, then click here.
About Zacks Mutual Fund Rank
By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds/mutualfund/
