Mutual funds that hold significant investments in diversified bonds are excellent choices for investors who want stable returns with relatively low risk levels. Sector-specific risk is also reduced by investing in funds that maintain a portfolio of bonds issued in a wide range of market sectors.
Investing in diversified bond funds is preferred over individual bond investments, as building the latter type of portfolio can prove relatively more expensive. Higher levels of liquidity also make diversified bond funds more attractive.
Below, we are sharing with you three top-ranked diversified bond mutual funds Federated Hermes International Bond Strategy FIBPX, Goldman Sachs Dynamic Bond GSOPX and iShares US Intermediate Credit Bond Index Fund Bicbx. Each has a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its competitors in the future. Investors can click here to see the complete list of funds.
Federated Hermes International Bond Strategy Invests primarily in emerging market fixed-income securities, including dollar and non-dollar debt from governments, agencies and corporations in all ratings and maturities, including below investment grade. It is non-diverse. The fund has given returns of 5.9% in the last three years.
Ihab Salib has been one of the fund managers of FIBPX since 2009.
Goldman Sachs Dynamic Bond Typically invests most of its net assets and borrowings in a diversified mix of U.S. and international investment-grade and high-yield bonds, along with other fixed income securities. The fund has given returns of 7.5% in the last three years.
As of December 2025, GSOPX had a total of 49% of its assets invested in diversified bonds.
iShares US Intermediate Credit Bond Index Fund Invests nearly all of its assets in index bonds, which track a market-weighted benchmark of investment-grade, dollar-denominated, fixed-rate, taxable corporate and intermediate maturity government-related bonds. The fund has given returns of 5.3% in the last three years.
BICBX has an expense ratio of 0.12%.
To see the Zacks Rank and past performance of all diversified bond mutual funds, investors can click here to see the complete list of diversified bond mutual funds.
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