Jump to content

Govt. and/or Agency only- Mutual fund


Recommended Posts

So, i need to find at least 1 or 2 mutual funds that only invest in US Governments and/or Agency bonds. It has to be 100% invested in fixed income of something with an implicit or explicit Gov. guarantee.


It has to be this type of a fund for Guardianship type accounts that have legal statutes that require only such type investments. I had my research assistant look into this for me and the funds he brought to me were technically not 100% invested in Gov. &/or Agency bonds, even though they implied so in their title, such as Loomis Sayles Ltd Govt. and Agency (NELYX) whose prospectus actually states: "the Fund will invest at least 80% of its net assets (plus any borrowings made for investment purposes) in investments issued or guaranteed by the U.S. government, its agencies or instrumentalities". So 20% won't be invested in such a manner, so that voids this fund as an option (or i would get in trouble with the judge).


I gave it a bit of my time and had a bit of trouble finding such a fund that is actually 100% invested in these types of securities, with a low expense ratio and load free, that doesn't have a high minimum $ requirement (b/c we don't have too many of these type of accounts). Anybody know of such a mutual fund off hand?


The intention is to put about 10-15% of an account's assets (labeled guardianship) into such a fund(s) and then purchase individual agency and govt. bonds (no corporates) for the rest.  If anybody already has a fund in mind that fits the bill, I'd appreciate a mention and save me some time next week. I figure at least one person on the board can think of such a fund(s). Thanks

Link to comment
Share on other sites

I suspect you are going to have trouble finding a fund that limits itself to only having 100% of anything.  What immediately came to my mind was something like one of the Vanguard funds.  They have the same "at least 80%" language.  This makes a lot of sense actually.  It's not that they intend to hold 20% of other types of assets, it's that they may not be able to buy the actual securities themselves or may be able to pick up a few extra bp by doing say a repo.  If they have money to invest, but can't find the right treasuries, for example, they need to enter into a derivative to do it.  Or what if they have a little cash?  That isn't a security.  So while economically the fund is 100% tied to treasuries, it isn't technically 100% invested in treasuries.  So if the statute requires 100% investment in these types of securities, you may need to buy individual ones and skip the fund.  Or, you may want to check to see whether it actually requires it be invested as opposed to economically linked.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Create New...