Fixed income funds aren’t the most profit-yielding sources of investment. In fact, they generally fall under the lowest tier of a financial investment tools’ pyramid. Stocks and the share market provide tempting offers that have a definitive return, usually on the higher end. However, should the stock market face a hit or your stocks see a downfall, a fixed income fund would help you get by till you’re back in the game.
The biggest challenge of fixed income funds, which primarily include government bonds, is the ever-increasing rate of interest. The constant rise in the rate of interest results in people avoiding bonds. Another hassle involving bonds is the tenure of the bond. The older bonds with a low yield have less demand, whereas the newer bonds with a high yield are more promising to buyers. The best way to approach this complicated scenario and mitigate the loss is by investing in one of the 10 best fixed-income funds and even consider choosing from among the top 10 fixed-rate bonds.
In the following, 5 fixed-income funds from among the top 10 have been listed.
Best fixed income funds
Discussed below are the top five fixed-income funds, which carry the least amount of risks and generate good returns.
Vanguard’s Short-Term Treasury ETF
The average maturity period of Vanguard’s Short-Term Treasury ETF is around two years, making it less susceptible to an upscaling rate of interest. It currently yields around 2.2 percent.
iShares 1-3 Years Treasury Bond ETF
Short-term bonds are known to have stability and reduces the risk of long-term rates that could pose as an added expense. iShares currently provides a 2.6 percent yield.
SPDR Bloomberg Barclays High-Yield Bond ETF
Risk-free funds give people the stability they look for financially. However, for those who don’t mind taking a leap in the dark, Bloomberg Barclay’s High-Yield bond is ideal. There is a high risk involved, but there is also a 5 percent yield on the bonds, which will not default.
PIMCO Total Return Bond ETF
PIMCO’s ETF gives you a 3.1 percent yield. However, there is a higher chance of the risk involved when investing in the fund and you might have to pay more expenses to maintain it.
VanEck Vectors® Fallen Angel High Yield Bond ETF
While the VanEck Vectors® Fallen Angel bonds might be in the top tier of junk bonds, the yields received on the funds are what make it attractive. It gives a satisfying yield of around 4.99 percent.
Whatever fund you choose, do your research well. Ensure you know the exit load associated with the fund you invest in so that in case you exit before the maturity date, you do not have to witness a huge dip in the overall returns from the fund.