3 Top-Ranked Diversified Bond Mutual Funds for Risk Reduction
For investors aiming for steady returns with a relatively low level of risk, putting money into mutual funds that have significant exposure to diversified bonds is an excellent decision. Diversified bond funds, by investing in a variety of bonds issued across numerous market sectors, have the advantage of minimizing sector-specific risks, providing a safer investment avenue than focusing on bonds from a single sector.
Moreover, the appeal of diversified bond funds extends beyond reduced risk. Unlike individual bond investments, which can be more expensive to piece together, diversified bond funds offer a more cost-effective way to build a diversified portfolio. Additionally, these funds typically enjoy higher levels of liquidity, making them an even more attractive option for investors.
Let’s explore three top-ranked diversified bond mutual funds, each holding a Zacks Mutual Fund Rank #1 (Strong Buy) and anticipated to surpass their peers in the future. These funds are PGIM Absolute Return Bond PADAX, Goldman Sachs Strategic Income Fund GSZAX, and DWS Short Duration DBPIX, representing some of the best choices for reducing investment risk through diversified bond exposure.
PGIM Absolute Return Bond PADAX
The PGIM Absolute Return Bond fund aims for positive returns regardless of market conditions by mostly investing its assets in debt securities and other investments that provide exposure to bonds. The fund has the flexibility to venture into debt securities rated below investment grade, also known as junk bonds, in pursuit of its objectives.
With three-year annualized returns of 3.3%, the PGIM Absolute Return Bond fund demonstrates a solid track record. As of January 2024, approximately 45.5% of PADAX’s assets were invested in Miscellaneous Bonds, showcasing its diversified approach.
Goldman Sachs Strategic Income Fund GSZAX
Focusing on a diversified portfolio of domestic and international fixed-income securities, the Goldman Sachs Strategic Income Fund invests primarily in both investment-grade and non-investment-grade fixed-income securities. These may include government sovereign debt, corporate debt, adjustable-rate and fixed-rate mortgage-backed securities, and more.
The fund’s three-year annualized returns stand at 2.9%, and it maintains an expense ratio of 1.04%, indicating efficient management and a robust investment strategy capable of navigating diverse market conditions.
DWS Short Duration DBPIX
Specializing in fixed-income securities rated within the top four credit categories, the DWS Short Duration fund focuses on securities across various maturities. This approach helps manage risk and aim for consistent returns over time.
Under the stewardship of Jeff Morton since August 2017, the fund has achieved three-year annualized returns of 1.2%, reflecting its prudent investment strategy and risk management practices.
In summary, the PGIM Absolute Return Bond PADAX, Goldman Sachs Strategic Income Fund GSZAX, and DWS Short Duration DBPIX diversified bond mutual funds present appealing options for investors looking to reduce risk through diversified bond investments. Their top rankings and solid performance records underscore their potential to offer steady returns in a variety of market environments.
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