3 Top-Ranked Short-Term Government Bond Mutual Funds

Mutual funds investing in debt securities are among the most secure investment options, which provide regular income while protecting the capital invested. Funds that are part of this category bring a great deal of stability to portfolios with a large proportion of equity, while providing dividends more frequently than individual bonds. U.S. government bond funds usually invest in Treasury bills, notes and securities issued by government agencies. They are considered the safest in the bond fund category and are ideal for risk-averse investors.

Meanwhile, a short-term government bond fund is a mutual fund that is 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.

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. 

PNC Ultra Short Bond I (PNCIXFree Report) maintains a diverse portfolio by investing mainly in fixed-income securities like investment-grade securities. These investment-grade securities include domestic government securities, mortgage-backed securities, asset-backed securities, and corporate bonds. PNCIX’s portfolio is believed to have maturity of 18 months or lower. PNC Ultra Short Bond I has three-year annualized returns of 1.1%.

PNCIX has an annual expense ratio of 0.32% is lower than the category average of 0.50%.

PNC Ultra Short Bond A (PSBAX - Free Report) 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 has three-year annualized returns of 0.8%.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this ...

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