3 Top-Ranked Diversified Bond Funds to Hedge Risk and Boost Returns

Investing in diversified bond funds is preferred to individual bond investing, as building a portfolio of the second type may prove relatively more expensive. A higher level of liquidity also makes diversified bond funds more attractive.

Moreover, mutual funds having significant exposure to diversified bonds are excellent choices for investors seeking steady returns with a relatively low level of risk. Investing in funds that maintain a portfolio of bonds issued across a wide range of market sectors also reduces sector-specific risk.

Below, we share with you three top-ranked diversified bond mutual funds, namely Invesco Global Strategic Income Fund OPSIX, Nuveen Preferred Securities & Income Fund NPSAX and T. Rowe Price Global Multi-sector Bond Fund PRSNX. 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.

Invesco Global Strategic Income Fund invests most of its assets in debt securities like government bonds and notes, mortgage-related securities, corporate debts, including lower-grade, high-yield domestic and foreign corporate debts, “structured” notes, participation interests in loans, investments in pooled investment entities, asset-backed securities and zero-coupon securities. OPSIX advisors may also invest in foreign issues.

Invesco Global Strategic Income Fund has three-year annualized returns of 8.2%. As of the end of October 2025, OPSIX had 40.6% of its assets invested in Miscellaneous Bonds.

Nuveen Preferred Securities & Income Fund seeks a high level of current income as well as total return by investing most of its assets, along with borrowing, if any, in preferred securities and other income-producing securities. NPSAX advisors also invest in companies principally engaged in financial services, and securities rated investment grade and below-investment grade in various proportions.

Nuveen Preferred Securities & Income Fundhas three-year annualized returns of 7.7%. NPSAX has an expense ratio of 1%.

T. Rowe Price Global Multi-sector Bond Fund invests most of its assets, along with borrowings, if any, in foreign bonds of governments or companies that have substantial business outside the United States. PRSNX advisors generally invest in a variety of issues to enhance income and achieve capital growth.

T. Rowe Price Global Multi-sector Bond Fund has three-year annualized returns of 7.5%. Kenneth Orchard has been the fund manager of PRSNX since January 2018.

To view the Zacks Rank and the 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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This article originally published on Zacks Investment Research (zacks.com).

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