Mutual funds having significant exposure to diversified bonds are excellent choices for investors seeking steady returns with a relatively low level of risk. Investing in funds that maintain a portfolio of bonds issued across a wide range of market sectors also reduces sector-specific risk.
Moreover, investing in diversified bond funds is more preferred to individual bond investing, as building a portfolio of the second type may prove relatively more expensive. A higher level of liquidity also makes diversified bond funds more attractive.
Below, we share with you three top-ranked diversified bond mutual funds, namely Nuveen Preferred Securities & Income Fund NPSAX, Ave Maria Bond Fund AVEFX and BlackRock Floating Rate Income Fund BFRAX. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds.
Nuveen Preferred Securities & Income Fund seeks a high level of current income along with total return by investing most of its assets along with borrowing, if any, in preferred securities and other income-producing securities. NPSAX advisors also invest in companies principally engaged in financial services, securities-rated investment grade and in below investment grade in various proportions.
Nuveen Preferred Securities & Income Fund Shares has three-year annualized returns of 1.0%. As of the end of November 2022, NPSAX had 65.91% of its assets invested in preferred stocks.
Ave Maria Bond Fund invests most of its assets, along with borrowings, if any, in investment-grade debt securities of domestic issuers along with U.S. government and its agencies like corporations, municipalities and money market instruments. AVEFX advisors also invest a small portion of its assets in preferred stocks, common stocks paying dividends and securities convertible into common stock of domestic or foreign issuers, irrespective of their market capitalization.
Ave Maria Bond Fund has three-year annualized returns of 2.9%. AVEFX has an expense ratio of 0.42% compared with the category average of 0.64%.
BlackRock Floating Rate Income Fund seeks floating rate income by investing most of its net assets in floating rate investments and other investments with similar economic characteristics. BFRAX advisors may also purchase, without limitation, participations or assignments in senior floating rate loans or second lien floating rate loans.
BlackRock Floating Rate Income Fund has three-year annualized returns of 2.4%. James Keenan has been one of the fund managers of BFRAX since July 2010.
To view the Zacks Rank and the past performance of all diversified bond mutual funds, investors can click here to see the complete list of diversified bond mutual funds.
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