Zacks #1 Ranked Diversified Bond Mutual Funds - Best of Funds

Diversified bond funds provide investors with a convenient and affordable option to hold a portfolio of bonds from different economic sectors. The costs incurred to create a portfolio of individual bonds would be significantly higher than investing in this class of funds. The associated risk also undergoes a decline since volatility in a specific sector has only a partial effect on the fund's fortunes. The opportunity to reinvest the income generated and a relatively higher level of liquidity also make them secure and attractive investments.

Below we will share with you 5 top rated diversified 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 diversified bond funds, then click here.

Touchstone Core Bond A (TOBAX) seeks high current income. The fund invests a large share of its assets in debt securities with investment grade ratings. Mortgage-related securities, asset backed instruments, government and corporate debt constitute its major investments. The diversified bond mutual fund returned 8.06% in the last one year period.

The diversified bond mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.90% compared to a category average of 0.91%.

Columbia Strategic Income A (COSIX) invests in three categories of debt securities. These include, U.S. government bonds and assets backed securities; foreign securities, including those issued from emerging markets and corporate debt rated below investment grade. The diversified bond mutual fund returned 6.11% in the last one year period.

Laura Ostrander is the fund manager and he has managed this diversified bond mutual fund since 2000.

Lord Abbett Core Fixed Income A (LCRAX) seeks capital growth and current income. The fund invests the majority of its assets in debt securities of different kinds. It seeks to acquire U.S. government securities, investment grade domestic and foreign securities, asset backed instruments, senior loans and derivatives. The diversified bond mutual fund returned 7.61% in the last one year period.

As of September 2011, this diversified bond mutual fund held 350 issues, with 8.76% of its total assets invested in U.S. Treasury Note 1%.

Delaware Pooled Core Plus Fixed Income (DCPFX) invests in three categories of debt securities. These include domestic investment grade bonds, domestic high yield bonds and foreign securities. The fund purchase securities denominated in any currency. The diversified bond mutual fund returned 7.75% in the last one year period.

The diversified bond mutual fund has an expense ratio of 0.45% compared to a category average of 0.91%.

RidgeWorth Total Return Bond A (CBPSX) seeks total return higher than that provided by the domestic investment grade bond sector. The fund purchases securities rated investment grade by at least one domestic securities rating firm. The diversified bond mutual fund returned 9.25% in the last one year period.

Adrien Webb is the fund manager and he has managed this diversified bond mutual fund since 2002.

To view the Zacks Rank and past performance of all diversified bond mutual funds, then click here.

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.