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3 Strong Buy Short-Term Government Bond Mutual Funds

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 which provide regular income while protecting the capital invested. Funds which 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, they are considered to be the safest in the bond fund category and are ideal options for the risk-averse investor.

Below we will share with you three top rated short-term government bond mutual funds . Each has earned a Zacks Mutual Fund #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 short-term government bond mutual funds, investors can click here to see the complete list of funds .

Lord Abbett Short Duration Income C (LDLAX) seeks a high level of income and preservation of capital. LDLAX invests a minimum of 65% of its assets in investment grade debt securities. These may include corporate debt securities of U.S. issuers and non-U.S. issuers denominated in U.S. dollars, mortgage-backed securities, U.S. government securities and inflation-related investments. The Lord Abbett Short Duration Income C fund returned 0.3% in the last one year.

As of December 2015, LDLAX held 1258 issues, with 1.40% of its total assets invested in US Treasury Note 0.875%

American Funds Short-Term Tax-Exempt Bond F2 (ASTFX) invests a large portion of its assets in securities that are exempt from regular federal income tax. ASTFX invests not more than 20% of its assets in securities that are subject to federal alternative minimum tax. ASTFX mostly invests in debt securities having a rating of AA- or better. ASTFX’s combined portfolio has a dollar-weighted average maturity of not more than three years. The American Funds Short-Term Tax-Exempt Bond F2 fund returned 0.9% in the last one year.

ASTFX has an expense ratio of 0.55% compared to a category average of 0.71%.

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 returned 0.3% in the last one year.

As of March 2016, PSBAX held 96 issues, with 6.22% of its total assets invested in US Treasury Note 0.28375%

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 .

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. Pick the best mutual funds with the Zacks Rank.


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