Bonds are the natural choice of investors for whom a regular income stream takes precedence over growth of capital invested. However, the cost of creating a portfolio consisting of bonds from various categories may become prohibitive. This is why many investors opt for mutual funds as a convenient and affordable method of investing in bonds. Diversified bond mutual funds further reduce the risk associated with such instruments by holding securities across classes and sectors. Thus, any negative fluctuation in a specific sector has only a marginal 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. To view the Zacks Rank and past performance of all diversified bond mutual funds, then click here.
| Mutual Fund | SEC Yield |
| Putnam Diversified Income A | 8.04% |
| Delaware Optimum Fixed Income A | 6.79% |
| Frontegra Columbus Core | 6.67% |
| Oppenheimer Strategic Income A | 5.75% |
| Transamerica Partners Core Bond | 5.59% |
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 32.68% in the last one year period and has a ten year annualized return of 6.09%.
The Fund Manager is Michael A. Atkin and he has managed this diversified bond mutual fund since 2007.
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 8.17%.
The diversified bond mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.24% compared to a category average of 0.95%.
Frontegra Columbus Core (FRIGX) invests the majority of its assets in bonds rated investment grade with a variety of maturity periods. The fund seeks out securities which are attractively priced compared to their intrinsic value. It seeks total return consistent with preservation of capital. The diversified bond fund has a five year annualized return of 7.54%.
As of June 2010, this diversified bond mutual fund held 95 issues, with 10.54% of its total assets invested in United States Treas Nts 1%.
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. It may invest all its assets in any one of these sectors and may not invest at all in a sector at a given point of time. The fund returned 21% over the last one year period.
Arthur P. Steinmetz is the fund manager and has managed this diversified bond mutual fund since 1989.
Transamerica Partners Core Bond (DVGCX) invests the majority of its assets in bonds and related instruments. The fund invests heavily in U.S. Government securities and investment grade bonds. It utilizes an underlying mutual fund to invest in these securities and the average maturity period of its portfolio ranges between five to fifteen years. The fund has a ten year annualized return of 5.65%.
The diversified bond mutual fund an expense ratio of 0.97% compared to a category average of 0.94%.
To view the Zacks Rank and past performance of all diversified bond mutual 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/
