Money Matters

16 March 2018

Investing can be a confusing alphabet soup of names and numbers. There are many strategies and roadmaps to get the investor to their desired goals. Education should be your main objective and never invest in anything you do not understand. Ideally, you should know the subject well enough to teach another person the what, why, and how of your choices.

Many investors use fixed-income mutual funds as a way to balance their investment portfolios. For investors who want to generate income with low risk, here are some of the best fixed income mutual funds in the U.S. according to Finance Web, 2017. This article does not endorse any of these investment products and is for educational use only. Consult with a certified financial advisor for more information.

Fidelity Spartan Short-Term Treasury Bond Index Fund

As of 2016, this fund holds close to $1 billion in assets. 80 percent of the fund’s assets are in the Barclays U.S. 1-5 year Treasury Bond Index. The goal of the fund is the preservation of capital while maintaining a high level of passive income. According to CNN Money, this fund has 99 percent of its holdings in fixed income with less than 1 percent in cash.

Vanguard Intermediate-Term Bond Index Fund

As of 2017, this fund holds 22.5 billion in assets with an average NAV return of 3.9 percent, according to Investopedia. The fund tracks the Barclays 5-10 Year Credit/Government Adjusted Index. The index consists of investment-grade foreign bonds, domestic corporate bonds and with five to 10-year maturity dates. The fund’s portfolio consists of agency and government bonds (52 percent) with 25 percent in bonds issued by industrial companies. Around 13 percent of the fund’s allocations are in the financial services industry.

Charles Schwab Inflation-Protected Securities Index Fund

This index fund holds nearly $270 million in assets, as of 2017. It tracks what is known as the TIPS index, and the fund’s holdings are in U.S. dollars, which eliminates exposure to volatile foreign currencies. Most of the fund’s assets are in publicly-traded TIPS with one-year maturity dates. Morningstar, the financial publication that tracks the performance of mutual funds, gives this fund a four-star rating. The minimum investment is $100 and there are no load fees.

Vanguard Short-Term Inflation-Protection Fund

This fund from the well-known mutual fund company Vanguard holds $13 billion in assets, as of 2017. It also tracks the TIPS index, and its portfolio consists of public obligations that are protected from inflation. The fund has little risk exposure to interest rate fluctuations since most of the assets have maturity dates that are less than five years. The minimum investment is $3,000 and received a five-star rating from Morningstar.

These funds represent a few of the best fixed income mutual funds available in the U.S. today. However, these funds are only recommendations, and there is no magic formula that guarantees passive income each year from investing in mutual funds. Many investors have done well with these income-producing investments after completing comprehensive research on the subject.

Jeff Tucker

Lighthouse Financial Coaching is an Austin-based company dedicated to helping regular families and individuals become organized with personal finance and begin to win with money and move forward to achieve their financial dreams and goals. Schedule your free introductory consultation today. Click or email



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