5 Top-Rated Government Bond Funds to Buy - Mutual Fund Commentary

Conservative investors prefer debt instruments not only because they safeguard the capital invested but also for the regular income flows they provide. Bonds bring a great deal of stability to an equity-heavy portfolio while providing dividends more frequently than individual bonds. U.S government bonds mutual funds usually invest in Treasury bills, notes and securities issued by government agencies. 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 5 top rated government 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 government bond funds, investors can click here to see the complete list of funds.

MassMutual Select Strategic Bond A (MSBAX) seeks total return. It invests a majority of its assets in fixed income instruments and other debt securities of both U.S. and non U.S. issuers which may include corporate bonds and other securities that are backed by the U.S. government or its entities. It may also invest in money market securities and mortgage backed securities. The government bond mutual fund returned 8.1% over the last one year period.

The fund has an expense ratio of 1.14% as compared to category average of 0.88%.

Dreyfus US Treasury Long-Term (DRGBX) invests a majority of its assets in U.S. Treasury instruments. It may also invest in other instruments which are approved by the domestic government or issued by its entities. It generally has duration of more than or equal to 7.5 years and minimum of 10 years of weighted duration of maturity. The government bond mutual fund returned 13.9% over the last one year period.

Robert Bayston is the fund manager and has managed this fund since 2008.

T. Rowe Price US Treasury Long-Term (PRULX) seeks high income with credit protection. The fund invests a lion's share of its assets in government affiliated U.S. Treasury securities. The rest of the assets are invested in other government backed instruments. It has a maturity between 15-20 years and may also vary from 10-30 years. The government bond mutual fund returned 13.5% over the last one year period.

The fund has an expense ratio of 0.52% as compared to category average of 0.56%.

Fidelity Spartan Long-Term Treasury Bond Index Fund Fidelity Advantage (FLBAX) invests most of its assets in securities listed in Barclays U.S. Long Treasury Bond Index. The fund tries to replicate the performance of Barclays U.S. Long Treasury Bond Index by using statistical sampling techniques on the back of interest rate sensitivity and maturity among others. The government bond mutual fund returned 14.3% over the last one year period.

As of June 2014, this fund held 42 issues with 6.22% of its assets invested in US Treasury Bond 3.75%.

PIMCO Real Return A (PRTNX) seeks maximum return with capital protection. The fund invests heavily in inflation-indexed bonds issued by the governments or by their affiliated agencies. This may include derivatives such as options, futures and swaps. Although it invests in investment grade instruments, it may also invest a maximum of 10% of its assets in junk bonds. The government bond mutual fund returned 6.1% over the last one year period.

This non-diversified fund has an expense ratio of 0.85% as compared to category average of 0.79%.

To view the Zacks Rank and past performance of all 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. Learn more about the Zacks Mutual Fund Rank in our Mutual Fund Center.