Federated Bond Fund (FDBAX)

To reach a full asset diversification, investors need to invest in bond or fixed income sector. Diversified bond mutual fund can provide less risk and low cost option for investment. One of the best diversified bond mutual funds is Federated Bond fund.

Federated Bond A (FDBAX)

The Federated Bond mutual fund objective is to provide as high a level of current income with consistent capital preservation. This bond mutual fund invests mainly in a diversified portfolio of investment-grade fixed-income securities. It may invest minority of its assets (<35%) in junk bonds or high yield bonds. This fixed income mutual fund may also invest in government securities.

Fund Profile

• Fund Inception Date: 06/28/1995
• Ticker Symbol: FDBAX
• CUSIP: 31420F103
• Beta (3yr): 0.88
• Rank in category (YTD): 15%
• Category: Intermediate-Term Bond
• Yield: 5.38%
• Capital Gains: 0%
• Expense Ratio: 0.98%  
• Net Assets: $ 1.38 billion
• Number of Years Up: 14 years
• Number of Years Down: 2 years
• Average Duration: 5.4 years
• Average Maturity: 8.5 years
• Annual Turnover Rate: 13.00%

Updated on 2/23/2012

Federated Bond A Fund

The annual expense ratio of this bond fund is 0.98% compared to the average in the Intermediate-Term Bond category which is 0.91%. The 12b1 fee is 0.05%. The maximum sales load is 4.50%. Joseph M. Balestrino, Mark E. Durbiano and Todd A. Abraham are the current fund managers of this fund. This intermediate-term bond fund has total net assets of $1.36 billion. The fund has dividend yield of 5.38%. The latest dividend distribution was on January 24, 2012 ($0.04). The annual holdings turnover of this fund as of February 14, 2012 is 13.00%.

Morningstar has rated this best mutual fund with 4-star rating. The YTD return of this fund is 2.19%. This fund has recorded 14 years of positive return and 2 years of negative return. The best 1-year total return of the fund was achieved in 2009 with 26.46%. And the worst return was in 2008 with -10.27%. Based on the load adjusted return, the fund’s performance is as below:

• 1-year: 2.61%
• 3-year: 12.74%
• 5-year: 6.43%
• 10-year: 6.57%

This diversified bond mutual fund can be purchased through 117 brokerages such as Merrill Lynch, JP Morgan, Vanguard, EP Fee Small, E Trade Financial, Morgan Stanley Advisors, Edward Jones, etc. To start investing in this Federated Bond fund, the minimum initial buy is $1,500. The minimum subsequent investment is $100. The other classes of this fund are Class B (FDBBX), Class C (FDBCX), Class F (ISHIX) and Institutional Class (FDBIX).  The benchmarks of this fund are 75% Barclays Capital U.S. Credit Bond Index and 25% Barclays Capital High Yield 2% Constrained Index.

Best Government Bond Mutual Funds

As of January 31, 2012, this FDBAX fund has total of 420 holdings. The top 10 holdings are JP Morgan Chase & Co (0.9%), Boston University (0.7%), AT&T Wireless Services Inc (0.6%), Citigroup Inc (0.6%), General Electric Capital Corp (0.6%), Grupo Televisa SA (0.6%), Morgan Stanley (0.6%), Petroleos Mexicanos (0.6%), General Electric Capital (0.5%) and MidAmerican Energy Holdings Co (0.5%). These top ten holdings represent 6.2% of the total portfolio. The effective maturity of the fund is 8.5 years and the effective duration is 5.4 years.

Investing in this mutual fund involves risks such as Interest Rate Risk, Issuer Credit Risk, Counterparty Credit Risk, Call Risk, Prepayment Risk, Liquidity Risk, Leverage Risk, junk bond risk, foreign investing risk, derivative risk, etc.

Disclosure: No Position

Other Top Bond Mutual Funds:

• MFS Bond A (MFBFX)
• TCW Core Fixed-Income N (TGFNX)