Mutual funds investing in debt securities are among the most secure investment options that provide regular income while protecting the capital invested. Funds in this category bring a great deal of stability to portfolios with a large proportion of equity while providing dividends more frequently than individual bonds. U.S. government bond funds usually invest in Treasury bills, notes and securities issued by government agencies. They are considered the safest in the bond fund category and are ideal for risk-averse investors.
A short-term government bond fund is a mutual fund that is limited by its investment objectives and fund bylaws to investing primarily in short-term obligations of the federal government or its agencies. This makes it an ideal option for investors looking for the safety net of investing in government bonds. Depending on the fund’s definition, the short term can be up to five years.
Below, we share with you three top-ranked short-term government bond mutual funds, viz., Loomis Sayles Ltd Term Govt and Agency NEFLX, CM Advisors Fixed Income CMFIX and SEI Short-Duration Government TCSGX. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds.
Loomis Sayles Ltd Term Govt and Agency fund seeks a high current return consistent with preservation of capital. NEFLX invests most of its assets in investments issued or guaranteed by the U.S. government, its agencies or instrumentalities.
Loomis Sayles Ltd Term Govt and Agency fund has three-year annualized returns of 4.8%. Clifton V. Rowe has been one of the fund managers of NEFLX since 2001.
CM Advisors Fixed Income fund invests in U.S. dollar, fixed-income assets considered undervalued, including corporate, government and mortgage-backed bonds, focusing mainly on debt securities and related investment companies emphasizing fixed-income holdings.
CM Advisors Fixed Income fund has three-year annualized returns of 7.9%. CMFIX has an expense ratio of 0.87%.
SEI Short-Duration Government fund seeks to preserve principal value and maintain liquidity while providing current income. TCSGX invests substantially all of its net assets in U.S. Treasury obligations and obligations issued or guaranteed as principal and interest by agencies or instrumentalities of the U.S. government, including mortgage-backed securities and repurchase agreements collateralized by such obligations.
SEI Short-Duration Government fund has three-year annualized returns of 4.7%. As of July 2025, TCSGX held 3% of its assets invested in Federal National Mortgage Association.
To view the Zacks Rank and the past performance of all short-term government bond mutual funds, investors can click here to see the complete list of short-term government bond mutual funds.
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