During a period of falling interest rates, bonds are among the most attractive of instruments. Apart from the fact they carry lower levels of risk, certain categories of bonds carry other benefits such as exemption from state and local taxes. Since they are backed by the full faith of the US government itself, these instruments also have high credit ratings. By holding widely diversified portfolios of government securities mutual funds represent an even more secure and convenient option of investing in such instruments.
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. To view the Zacks Rank and past performance of all government bond funds, then click here.
| Mutual Fund | SEC Yield |
| Oppenheimer US Government A | 4.77% |
| Fidelity Spartan Long Term Treasury Bond Index | 4.20% |
| ISI North American Government Bond A | 3.84% |
| Vanguard Long Term Treasury Investor | 3.54% |
| JP Morgan Government Bond A | 3.25% |
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 3.95%.
The government bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.90% compared to a category average of 1.00%.
Fidelity Spartan Long Term Treasury Bond Index (FLBIX) seeks to match the performance of the Barclays Capital U.S. 5-10 Year Treasury Bond Index. The majority of the fund’s assets are utilized to purchase investment-grade fixed-rate public obligations of the U.S. Treasury. The government bond mutual fund returned 12.52% over the last one year period.
As of August 2010, this government bond mutual fund held 35 issues, with 7.31% of its total assets invested in United States Treas Bds 4.625%.
ISI North American Government Bond A (NOAMX) seeks high current income along with a reasonable level of risk. The majority of its assets are utilized to purchase a wide range of bonds rated investment grade which are issued or guaranteed by the U.S, Canadian and Mexican governments. The government bond mutual fund has a five year annualized return of 6.11%.
The Fund Manager is R. Alan Medaugh and he has managed this government bond mutual fund since 1993.
Vanguard Long-Term Treasury Investor (VUSTX) invests heavily in U.S Treasury securities. Bills, bonds and notes issued by the U.S. Treasury constitute its major investments. The securities held by the fund have maturities ranging from 15 to 30 years. The government bond mutual fund returned 12.46% in the last one year period.
The government bond mutual fund has a minimum initial investment of $3,000 and an expense ratio of 0.25% compared to a category average of 0.92%.
JPMorgan Government Bond A (OGGAX) seeks high current income and preservation of capital invested. 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 6.29%.
The Fund Manager is Michael J. Sais and he has managed this government bond mutual fund since 1996.
To view the Zacks Rank and past performance of all government 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.
