Investors looking at parking their funds with bonds, U.S. government securities are probably the safest possible investments in the category. Default risk is almost non-existent in this case, thought the trade-off is that the yields on such instruments are consequentially lower, a price for the quality of the investments. Moreover, interest payments on many treasury securities are exempt from local and state taxes. Consequentially, mutual funds holding government securities are the safest bond funds and a natural choice for the risk averse.
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, investors can click here to see the complete list of funds.
| Mutual Fund | Sec 30 Day Yield |
|---|---|
| Vanguard Long-Term Treasury Investor | 3.42% |
| Fidelity Spartan Long-Term Treasury Bond Index | 3.27% |
| Transamerica Partners IPS | 3.10% |
| Fidelity Spartan Intermediate-Term Treasury Bond Index | 2.64% |
| JPMorgan Government Bond A | 2.36% |
Vanguard Long-Term Treasury Investor (VUSTX) utilizes the majority of its assets to purchase securities issued by the U.S. Treasury, including bills, bond and notes. The average maturity period of the portfolio varies between 15 to 30 years. The government bond mutual fund returned 32.55% over the last one year period.
The government bond mutual fund has a minimum initial investment of $3,000 and an expense ratio of 0.22% compared to a category average of 0.84%.
Fidelity Spartan Long-Term Treasury Bond Index (FLBIX) seeks high current income. The fund invests a large share of its assets in securities which are part of the Barclays Capital U.S. Long Treasury Bond index. The government bond mutual fund returned 32.49% over the last one year period.
As of December 2011, this government bond mutual fund held 36 issues, with 6.17% of its total assets invested in US Treasury Bond 4.375%.
Transamerica Partners IPS (DVIGX) invests the majority of its assets in inflation-protected securities and related investments. The fund utilizes an underlying mutual fund to purchase these securities which are instruments issued by the U.S. government and its agencies. The government bond mutual fund returned 14.29% over the last one year period.
Martin Hegarty is the fund manager and has managed this government bond mutual fund since 2010.
Fidelity Spartan Intermediate-Term Treasury Bond Index (FIBAX) seeks high current income. The fund invests a large share of its assets in securities which are part of the Barclays Capital U.S. 5-10 Year Treasury Bond index. The government bond mutual fund returned 13.35% over the last one year period.
The government bond mutual fund has an expense ratio of 0.10% compared to a category average of 0.99%.
JPMorgan Government Bond A (OGGAX) invests the majority of its assets in government bonds. These securities may be issued or guaranteed by the U.S. government and its agencies. The average weighted maturity period of its portfolio ranges from 3 to 15 years. The government bond mutual fund returned 11.04% over the last one year period.
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, investors can click here to see the complete list of funds.
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.
