Diversified bond funds provide investors with a convenient and affordable option to hold a portfolio of bonds from different economic sectors. The costs incurred to create a portfolio of individual bonds would be significantly higher than investing in this class of funds. The associated risk also undergoes a decline since volatility in a specific sector has only a partial effect on the fund’s fortunes. The opportunity to reinvest the income generated and a relatively higher level of liquidity also make them secure and attractive investments.

Below we will share with you 5 top rated diversified bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all diversified bond funds, investors can click here to see the complete list of funds.

RidgeWorth Total Return Bond A (CBPSX - MF report) invests a lion’s share of its assets in debt securities of both domestic and foreign issuers, including emerging market debt. Not more than 20% of its assets are utilized to purchase high-yield debt securities rated below investment grade. It invests in income-generating debt securities such as mortgage backed securities, government and corporate obligations, and floating rate loans. It seeks total return higher than returns from domestic investment grade bond market. The diversified bond mutual fund returned 5.6% in the last one year period.

The diversified bond mutual fund has an expense ratio of 0.7% compared to a category average of 0.86%.

PIMCO Investment Grade Corporate Bond A (PBDAX - MF report) seeks total return along with capital preservation. The fund invests a large portion of its assets in investment grade debt securities of varying maturities that may be represented by derivative instruments. It may invest a maximum 15% of its total assets in junk bonds, rated B or higher by Moody's. The diversified bond mutual fund returned 8.6% in the last one year period.

Mark Kiesel is the fund manager and has managed this diversified bond mutual fund since 2002.

ICON Bond A (IOBAX - MF report) invests a large portion of its assets in U.S. dollar-denominated bonds. These consist of corporate bonds, notes and debentures, including U.S. government and agency securities. The diversified bond mutual fund returned 3.4% in the last one year period.

As of December 2014, this diversified bond mutual fund held 63 issues, with 4.67% of its total assets invested in Diversified Real Asset Income

PIMCO Income A (PONAX - MF report) seeks current income. The fund invests a minimum of 65% in Fixed Income Instruments that have different maturities including options, forwards and swaps. Also, a maximum of 50% is invested in below investment grade high-yield securities. However, these securities must have at least Caa rating by Moody’s or equivalent rating agencies. The diversified bond mutual fund returned 5.4% in the last one year period.

The diversified bond mutual fund has an expense ratio of 0.85% compared to a category average of 1.03%.

T. Rowe Price Spectrum Income Fund (RPSIX - MF report) invests generally in domestic and foreign bond funds, money market funds, and an income-oriented stock fund. The fund may invest in funds holding high-quality U.S. and non-U.S. bonds. It broadly diversifies its assets among T. Rowe Price mutual funds from specific market sections. The diversified bond mutual fund returned 3.7% in the last one year period.

Charles M. Shriver is the fund manager and has managed this diversified bond mutual fund since 2011.

To view the Zacks Rank and past performance of all diversified bond mutual funds, investors can click here to see the complete list of funds.