Buy These 3 Diversified Bond Mutual Funds to Outperform Peers

Mutual funds having significant exposure to diversified bonds are excellent choices for investors seeking steady returns with a relatively low level of risk. Investing in funds that maintain a portfolio of bonds issued across a wide range of market sectors also reduces sector-specific risk.Moreover, investing in diversified bond funds is preferred to individual bond investing, as building a portfolio of the second type may prove relatively more expensive. A higher level of liquidity also makes diversified bond funds more attractive.Below, we share with you three top-ranked diversified bond mutual funds, namely Nuveen Preferred Securities NPSAX, Osterweis Strategic Income OSTIX and Ave Maria Bond AVEFX. Each has a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds.Nuveen Preferred Securities allocates the majority of its net assets to preferred and other income-generating securities, with a portion invested in companies mainly operating in the financial services sector. It typically commits most of its net assets to investment-grade securities. The fund has returned 6.9% over the past three years. Douglas M. Baker has been one of the fund managers of NPSAX since June 2007.Osterweis Strategic Income primarily invests in income-generating securities, with its advisors aiming to manage risk through thorough credit and economic analysis, interest rate projections and sector trend evaluations. The fund has returned 8.5% over the past three years.As of June 2025, OSTIX had 31.5% of its assets invested in Total Misc Bonds.Ave Maria Bond primarily invests in investment-grade debt securities issued by U.S. entities, including the government, its agencies and instrumentalities, corporations, municipalities and money market instruments. AVEFX may also allocate a portion of its assets to preferred stocks, dividend-paying common stocks and convertible securities. The fund has returned 5.4% over the past three years.AVEFX has an expense ratio of 0.41%.To view the Zacks Rank and the past performance of all diversified bond mutual funds, investors can click here to see the complete list of diversified bond mutual funds.Want key mutual fund info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>One Big Gain, Every Trading DayTo help you take full advantage of this market, you’re invited to access every stock recommendation in all our private portfolios - for just $1.Zacks private portfolio services that closed 256 double and triple-digit winners in 2024 alone. That’s about one big gain every day the market was open. Of course, not all our picks are winners, but members have seen recent gains as high as +627% +1,340%, and +1,708%.Imagine how much you could profit with a steady stream of real-time picks from all our services that cover a number of strategies to suit a variety of investing and trading styles.See Stocks Now >>View All Zacks #1 Ranked Mutual FundsWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (NPSAX): Fund Analysis Report Get Your Free (AVEFX): Fund Analysis Report Get Your Free (OSTIX): Fund Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks