A short-term government bond fund is a mutual fund that’s limited by its investment objectives and fund bylaws to investing primarily in short-term obligations of the federal government or its agencies. Depending on the fund’s definition, short term can be up to five years.
Meanwhile, mutual funds investing in government debt securities are among the most secure investment options that provide regular income, while protecting the capital invested. Funds that are part of this category bring a great deal of stability to a portfolio with a large proportion of equity, while providing dividends more frequently than individual bonds. Hence, these are considered the safest in the bond fund category and are ideal options for risk-averse investors.
Below we share with you three top rated short-term government bond mutual funds. Each has earned a Zacks Mutual Fund #1 Rank (Strong Buy) and is expected to outperform its peers in the future.
PIA Short Term Securities Advisor PIASX invests a large chunk of its assets in securities that have maturity period of three years or less. The fund generally invests in those securities that are rated Baa3 and/or BBB- or higher by a Nationally Recognized Statistical Rating Organization. PIA Short Term Securities Advisor has three-year annualized returns of 1.1%.
PIASX carries an expense ratio of 0.39% compared with the category average of 0.51%.
PNC Ultra Short Bond A PSBAX seeks to provide current income while preserving capital. PSBAX invests in investment-grade securities including U.S. government securities, corporate bonds, asset-backed securities and mortgage-backed securities. PSBAX has a dollar-weighted average maturity of not more than 18 months, but may vary outside that range from time to time. The PNC Ultra Short Bond A fund has three-year annualized returns of 0.7%.
As of November 2018, PSBAX held 100 issues, with 3.75% of its total assets invested in United States Treasury Notes 1.5%.
Prudential (LON:PRU) Short Duration High Yield Income A HYSAX invests a huge part of its assets in high-yield fixed income securities that are rated lower than investment grade. The fund invests in securities with different maturities. HYSAX seeks maximization of income. Prudential Short Duration High Yield Income A has three-year annualized returns of 4.5%.
Robert Spano is one of the fund managers of HYSAX since 2012.
To view the Zacks Rank and past performance of all short-term government bond mutual funds, investors can click here to see the complete list of funds.
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