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 a secure and attractive investments.

Below we will share with you 5 buy-rated diversified bond mutual funds. Each has earned either a Zacks Mutual Fund Rank #1 (Strong Buy) or a Zacks Mutual Fund Rank #2 (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 mutual funds, investors can click here to see the complete list of funds.

MassMutual Premier Short-Duration Bond R5 (MSTDX - MF report) seeks high level of total return. MSTDX maintains a diversified portfolio by investing predominantly in fixed income securities. MSTDX invests a lion’s share of its assets in investment grade securities. MSTDX is expected to maintain a dollar-weighted average maturity of three years or less. MSTDX may invest not more than 10% of its assets in securities below investment grade. The MassMutual Premier Short-Duration Bond R5 fund has returned 1.6% over the past one year.

MSTDX has an expense ratio of 0.52% compared to a category average of 0.82%.

Osterweis Strategic Income (OSTIX - MF report) generally invests in income producing securities. OSTIX may invest all of its assets in debt securities of foreign issuers. OSTIX may also invests in equity securities that are expected to pay dividends. OSTIX uses credit and economic analysis in order to select its investments. The Osterweis Strategic Income fund has returned 2% in the year-to-date frame.

As of June 2015, OSTIX held 107 issues, with 3.46% of its total assets invested in Rite Aid 9.25%.

PIMCO Income A (PONAX - MF report) seeks maximum current income. PONAX invests a minimum of 65% of its assets in fixed income securities from a wide range of sectors. These securities may include options, futures contracts and swap agreements. PONAX may invest not more than half of its assets in securities that are rated below investment grade. The PIMCO Income A fund has returned 2.2% in the year-to-date frame.

Alfred T. Murata is one of the fund managers and has managed PONAX since 2013.

Fidelity Strategic Income (FSICX - MF report) invests predominantly in fixed income securities, which also include debt securities of lower quality. FSICX allocates its assets across four categories of debt securities: high yield securities, U.S. government and investment-grade securities, emerging market securities, and foreign developed market securities. The Fidelity Strategic Income fund has returned 0.3% in the year-to-date frame.

FSICX has an expense ratio of 0.69% compared to a category average of 1.03%.

JPMorgan Core Bond A (PGBOX - MF report) seeks maximum total return. PGBOX is expected to maintain a well spread portfolio by investing intermediate and long-term debt securities that are rated investment grade. PGBOX’s holdings may consist of U.S. treasury securities, corporate bonds and US government approved securities. PGBOX maintains a dollar weighted average maturity of 4 to 12 years. The JPMorgan Core Bond A fund has returned 0.8% in the year-to-date frame.

As of July 2015, PGBOX held 4,584 issues, with 1.06% of its total assets invested in U S Treas Sec Stripped Int Pmt.

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