Short and sweet: short-term government bond funds are a relatively safe entree in today's market. (Mutual Fund Focus).The past three years have proven that investors, young and old, need to have a stake in bonds. While a stalled stall 1 n. 1. A compartment for one domestic animal in a barn or shed. 2. a. A booth, cubicle, or stand used by a vendor, as at a market. b. economy has put a damper damp·er n. 1. One that deadens, restrains, or depresses: Rain put a damper on our picnic plans. 2. An adjustable plate, as in the flue of a furnace or stove, for controlling the draft. on stocks since 2000, the Federal Reserve's efforts to spark spark, in electricity: see arc. (language) SPARK - An annotated subset of Ada supported by tools supplied by Praxis Critical Systems (originally by PVL). http://sparkada.com. a recovery have given a boost to bond fund investors. Portfolios made up of short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. government obligations, such as Treasury and agency bonds, reported average total returns of 8.1%, 7.3%, and 6.7% for 2000, 2001, and 2002, respectively, years when the Standard & Poor's 500 logged losses of 9.1%, 11.9%, and 22.1%. Why have bonds done so well? Whenever Fed Chairman Alan Greenspan Alan Greenspan Dr. Greenspan is Chairman of the Board of Governors of the Federal Reserve System. Dr. Greenspan also serves as Chairman of the Federal Open Market Committee (FOMC), the Fed's principal monetary policymaking body. drops interest rates to prod borrowing and economic activity, the fixed income securities that bond portfolios hold appreciate in value. The Fed has slashed slash v. slashed, slash·ing, slash·es v.tr. 1. To cut or form by cutting with forceful sweeping strokes: slash a path through the underbrush. 2. rates 12 times since 2001, producing a boon Boon A general term that refers to a benefit or improvement for investors. This can include such things as increased dividends, a stock market rally and stock buybacks. Notes: for fund investors. Now that interest rates have dropped to record levels, some observers fear the bond run is over. The Fed's latest adjustment left the Fed fund's rate, or the interest charged to banks for short-term loans, a mere 1.25%. Indications are that rates may soon rise. Higher rates are not good news for bond fund investors. The value of bond funds increases when interest rates fall and decreases when rates rise. This makes them a more volatile investment than bonds themselves. "Investors who are somewhat late to the fixed income rally should be concerned about putting money in funds that carry a fair amount of interest rate risk," says Morningstar analyst Bradley Sweeney Sweeney in poems by T. S. Eliot, symbolizes the sensual, brutal, and materialistic 20th-century man. [Br. Poetry, Benét, 978] See : Virility "Short-term government bond funds are one of the more conservative options available." With that in mind, we screened data from Morningstar, the Chicago firm that monitors mutual funds, to dig up solid short-term government portfolios. Our chart ranks the top 10 by three-year average annual total returns at the end of the first week in March. Fidelity's Intermediate Government Fund (FSTGX) garnered the top spot. Despite its name, Morningstar classifies the fund as a short-term government holding. The Fidelity fund, which focuses primarily on Treasuries and mortgage-backed securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. issued by the federal government, boasts a 9.8% average annual total return over the three-year period ending March 7, 2003. Second place goes to RBC RBC red blood cell. RBC or rbc abbr. red blood cell RBC, n See red blood cell count. RBC red blood cells; red blood (cell) count (see blood count). Government Income (CSICX), a fund whose portfolio was dominated by mortgage-backed bonds issued by federal agencies such as Fannie Mae Fannie Mae: see Federal National Mortgage Association. . The RBC fund averaged an annual total return of 9.4%.
Top Short-Term Government Funds
1-Year 3-Year 5-Year
Fund Name (Ticker) Return * Return * Return *
Fidelity Intm Govt (FSTGX) 10.71% 9.80% 7.34%
RBC Govt Income (CSICX) 10.16 9.38 7.09
Northern U.S. Govt (NOUGX) 10.33 9.36 7.04
Managers Intm Duration Govt (MGIDX) 7.73 9.30 6.81
Fifth Third U.S. Govt Bd Inv (FSGSX) 9.42 8.87 6.54
Heritage Intm Govt (HRLGX) 9.12 8.74 6.61
Payden U.S. Govt (PYUSX) 8.44 8.66 6.84
Eaton Vance Govt Oblioations (EVGOX) 7.36 8.58 6.39
Vanguard Short-Term Federal (VSGBX) 7.67 8.58 6.88
Salomon Brothers Sht/Intm U.S. Govt
(SUSAX) 8.70 8.41 6.83
Minimum
Fund Name (Ticker) Phone Number Investment
Fidelity Intm Govt (FSTGX) 800-544-8888 $2,500
RBC Govt Income (CSICX) 800-442-3688 1,000
Northern U.S. Govt (NOUGX) 800-595-9111 2,500
Managers Intm Duration Govt (MGIDX) 800-835-3879 1,000
Fifth Third U.S. Govt Bd Inv (FSGSX) 800-282-5706 1,000
Heritage Intm Govt (HRLGX) 800-421-4184 1,000
Payden U.S. Govt (PYUSX) 800-572-9336 5,000
Eaton Vance Govt Oblioations (EVGOX) 800-225-6265 1,000
Vanguard Short-Term Federal (VSGBX) 800-662-7447 3,000
Salomon Brothers Sht/Intm U.S. Govt
(SUSAX) 800-725-6666 250
* AS OF MARCH 7, 2003. BASED ON TOTAL ANNUAL RETURN.
SOURCE: MORNINGSTAR INC.
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