A ‘Short Cut’ To Higher Yields

As interest rates are cut, investors can capitalize on short-term bond funds

money in a short-term bond fund and gradually move it into stocks,” says Van Pelt. “In the meantime, the money in the bond fund will earn a higher yield than it would in a money market fund. Even if interest rates fall some more, dropping your yield, you stand to benefit from price appreciation because the bonds in the fund will gain value.”

Just be sure to look closely at any fund before signing a deposit slip. “These funds are not homogeneous,” says Morningstar’s Berry. “Some hold government obligations while others hold corporate paper; some ultra-short funds keep maturities under one year while some short-term funds go out three years or longer.” The lower the credit quality of the paper and the longer the maturity, the higher the yield, but also the greater the risk if a fund’s manager comes up short in trying to foresee the future.

TOP SHORT-TERM GOVERNMENT FUNDS

Fund Name (Ticker)

Year-to-Date
Total Return*

1-Year Ann.
Total Return

3-Year Ann.
Total Return

5-Year Ann.
Total Return

Toll-Free
Number

Minimum
Initial Investment

American Cent Inf-Adj Inv (ACITX)

6.33%

13.58%

7.33%

800-345-2021

$2,500

Managers Interm Dur Gov (MGIDX)

3.23

13.08

5.85

7.11

800-835-3879

2,000

Accessor Mortgage Sec Adv (AMSFX)

3.22

12.98

6.30

7.56

800-882-9612

5,000

Eaton Vance Govt Oblig A (EVGOX)

4.00

12.09

5.87

6.42

800-225-6265

1,000

Asset Mgmt Interm Mort Secs (ASCPX)

3.15

11.99

6.33

7.11

800-527-3713

10,000

*Return through May 31, 2001Source: Morningstar Inc.


TOP SHORT-TERM BOND FUNDS

Fund Name (Ticker)

Year-to-Date
Total Return*

1-Year Ann.
Total Return

3-Year Ann.
Total Return

5-Year Ann.
Total Return

Toll-Free
Number

Minimum
Initial Investment

PIMCO Real Return Bond A (PRTNX)

7.32%

15.23%

9.67

888-877-4626

$2,500

PIMCO Total Return Mtg D (PTMDX)

3.87

14.21

7.05

800-225-8570

2,500

Advantus Mortgage Secs Inc A (ADMSX)

4.08

14.14

7.11

8.11

800-665-6005

250

Deutsche Short-Interm Inc A (FLINX)

3.52

12.30

6.04

6.66

800-730-1313

2,000

Harris Ins Sh/Int Bond N (HIMBX)  

GN=”CENTER”>3.54

12.29

5.95

6.54

800-982-8782

1,000

*Return through May 31, 2001Source: Morningstar Inc.

Pages: 1 2
ACROSS THE WEB