Government bond mutual funds are considered to be the safest class of investments in the bond fund category. These funds generally hold a portfolio of securities issued by the US Treasury and other government agencies which have negligible default risk. As a result, yields from these instruments are typically low along with low levels of associated risk. By holding widely diversified portfolios of these instruments, mutual funds contribute significantly to the safety associated with them.

Below we will share with you the 5 highest yielding Zacks #1 ranked 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.

Mutual Fund

Sec 30 Day Yield

Wasatch-Hoisington US Treasury

2.65%

Fidelity Spartan Long-Term Treasury Bond Index Fidelity Advantage

2.38%

ProFunds US Government Plus

2.13%

Vanguard Long-Term Treasury Investor

2.08%

Rydex Government Long Bond 1.2x Strategy

1.41%
 
 

Wasatch-Hoisington US Treasury (WHOSX) seeks to provide returns higher than the rate of inflation over a business cycle. The fund invests a majority of its assets in U.S Treasury securities and repurchase agreements backed by such instruments. The government bond mutual fund returned 6.66% over the last one year period.

The government bond mutual fund has a minimum initial investment of $2,000 and an expense ratio of 0.75% compared to a category average of 0.82%.

Fidelity Spartan Long-Term Treasury Bond Index Fidelity Advantage (FLBAX) invests a large share of its assets in securities which are part of the Barclays Capital U.S. Long Treasury Bond index. The dollar-weighted average maturity period of the portfolio is at least 10 years or more. The government bond mutual fund returned 6% over the last one year period.

As of September 2012, this government bond mutual fund held 38 issues, with 5.29% of its total assets invested in US Treasury Bond 4.375%.

ProFunds US Government Plus (GVPSX) seeks daily returns which are 125% of the daily returns of the most recently issued Long Bond. The fund purchases derivatives along with domestic government bonds which enables it to provide such daily returns. The government bond mutual fund returned 4.47% over the last one year period.

The Fund Manager is Michelle Liu and he has managed this government bond fund since 2009.

Vanguard Long-Term Treasury Investor (VUSTX) utilizes a large share of its assets to purchase various securities which are issued by the U.S. Treasury. The government bond mutual fund returned 6.2% over the last one year period.

The government bond mutual fund has a minimum initial investment of $3,000 and an expense ratio of 0.20% compared to a category average of 0.82 %.

Rydex Government Long Bond 1.2x Strategy (RYGBX) seeks returns which are 1.2x the returns of the long dated U.S Treasury Bonds. The fund invests in a variety of derivative instruments and U.S Government securities to match its investment objective. The government bond mutual fund returned 7.3% over the last one year period.

The Fund Manager is Ryan A. Harder and he has managed this government bond fund since 2008.

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 at http://www.zacks.com/funds.


 
(FLBAX): ETF Research Reports
 
(GVPSX): ETF Research Reports
 
(RYGBX): ETF Research Reports
 
(VUSTX): ETF Research Reports
 
(WHOSX): ETF Research Reports
 
To read this article on Zacks.com click here.
 
Zacks Investment Research