Top 10 Best Inflation Protected Bond Mutual Funds 2012

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Inflation protected bond are another important fixed income tool for investor to diversify their investment portfolio. Using mutual fund, investor can instantly provide asset diversification and reduce risk. Some of the best inflation protected bond funds are: DFA Inflation-Protected Securities I, American Independence US Inflation-Indexed A, PIMCO Real Return A, etc.

Top Inflation Protected Bond Funds
Intro

Inflation protected bond fund is a mutual fund which mainly invests in US or foreign securities inflation protected securities. In the U.S., this inflation protected obligation securities is known as TIPS (Treasury Inflation Protected Securities). This TIPS bond is introduced by US government in 1997.

Many investment advisers are endorsing TIPS, both for their safety and because of widespread concern about the inflationary implications of record government deficits. These inflation protected bond funds can be used as a tool to provide real return of your investment asset. They are typically also less volatile than stock funds.

Top Inflation Protected Bond Mutual Funds

These top rated Inflation Protected Bond Mutual Funds are selected based on its long term performance. Some of these funds also have sales load, please select another class of this fund with lower fee or load. I have provided these best mutual funds review in details such as fund management, expense ratio, top holdings, top sectors, yield, etc.

Top 10 Best Inflation Protected Bond Mutual Funds of 2012 are:
  1. DFA Inflation-Protected Securities I (DIPSX)
  2. American Independence US Inflation-Indexed A (FNIHX)
  3. PIMCO Real Return A (PRTNX)
  4. BlackRock Inflation Protected Bond Investor A (BPRAX)
  5. Hartford Inflation Plus A (HIPAX)
  6. American Century Inflation-Adjusted Bond Investor (ACITX)
  7. Delaware Inflation Protected Bond A (DIPAX)
  8. Nuveen Inflation Protected Securities A (FAIPX)
  9. T. Rowe Price Inflation Protected Bd (PRIPX)
  10. Dreyfus Inflation-Adjusted Sec Inv (DIAVX)
Updated on 4/17/2012

1. DFA Inflation-Protected Securities I (Ticker: DIPSX)

The investment objective of DFA Inflation-Protected Securities fund is to provide inflation protection and earn current income consistent with preservation capital. This mutual fund utilizes its net assets to purchase inflation-protected securities with maturities of between 5 and 20 years. This bond mutual fund may invest >25% of its total assets in Treasury bonds, bills and notes and obligations of U.S. government agencies and instrumentalities.

DFA Inflation-Protected Secs I
With total net assets of $2.08 billion, this inflation protected bond mutual fund is rated with 5-stars rating by Morningstar. It also has a dividend yield of 4.37%. The latest distribution was given in December 2011 in the amount of $0.12. As of March 13, 2012, the annual holdings turnover is 18%. This figure is much lower than the average turnover rate in the Inflation-Protected Bond category which is 113.79%.

This best inflation protected bond fund also has a low annual expense ratio of 0.13%. It is currently managed by Joseph Kolerich. He has just started managing this bond fund in February 2012. This DFA fund has an average maturity of 9.48 years and an average duration of 8.33 years. This best fund has used the Barclays Capital US TIPS Index as its benchmark.

According to the fund’s prospectus, some of the investment risks are: market risk, credit risk, interest rate risk, etc.

2. American Independence US Inflation-Indexed A (FNIHX)

This American Independence US Inflation-Indexed fund’s objective is to achieve a high level of total return in excess of inflation with consistent capital preservation. This fund generally invests majority of assets in inflation-indexed securities that are denominated in U.S. dollar and other derivative instruments. This mutual fund invests small part of assets (<20%) in foreign inflation-indexed securities, U.S. government & agency debts, and US or foreign corporate bonds.

Best Performer Inflation Protected Bond Mutual Funds 2011

The expense ratio of this inflation protected bond fund is 0.66% per year. Cedric Scholtes has been managing this bond fund since December 2006. The YTD return of it is 1.79%. It also has a dividend yield of 2.13%. The front end sales load is 4.25% and the 12b1 fee is 0.45%. You can start to invest in brokerage account with $5,000 initial funding.

Morningstar has ranked this bond fund with 2-stars rating. Since its inception, it has recorded 3 years of positive return and 1 year of negative return. Based on the load adjusted return, this inflation protected bond fund has returned 7.04% over the past 10-year.

The other classes of this FNIHX fund are Class C (FCIHX) and Class Institutional (FFFIHX). The sector weightings of this fund based on security type is 89.40% in U.S. Treasury Inflation-Indexed Securities and 10.60% in Cash Equivalents.

3. PIMCO Real Return A (PRTNX)

PIMCO Real Return A
The PIMCO Real Return fund invests majority of its net assets in inflation-indexed bonds of varying maturities issued by the U.S. & non-U.S. governments, and corporations. It may use forwards or derivatives such as options, futures contracts or swap agreements to represent its investment. Most of these bonds are investment-grade fixed income. This PIMCO fund may invest some of total assets (<10%) in high-yield bond or non-investment grade bond.

The current fund manager is Mihir Korah. This inflation protected bond mutual fund has been introduced to investors since January 1997. It has total net assets of $22.58 billion. It also has a yield of 3.27%. This PRTNX fund also has an expense ratio of 0.90% per year. The current sales load is 3.75%.

It also has 3-year annualized return of 13.12%. Morningstar analysts rated this best mutual fund with Gold rating and 3-stars rating. For regular brokerage account, the minimum initial purchase of this fund is $1.000. For retirement or IRA account, please check with your fund administrator.

As of February 2012, the top 7 sector allocations are Government Treasury (83%), Emerging markets (8%), Non-U.S. Developed (5%), Investment Grade Credit (3%), Mortgage (3%), High Yield Credit (2%), and Municipal (1%).

4. BlackRock Inflation Protected Bond Inv A (BPRAX)

The investment aim of BlackRock Inflation Protected Bond fund is to provide maximum real return, consistent with real capital preservation and prudent investment management. This mutual fund uses its assets to purchase inflation-indexed bonds of varying maturities issued by the U.S. & non-U.S. governments, agencies, and U.S. & non-U.S. corporations. It may invest some of its assets (<20%) in non-investment grade bonds or emerging market debts.

BlackRock Inflation Protected Bond  Inv A
This inflation protected bond fund was first introduced to public in June 2004. The total net assets of this fund are $4.77 billion. The current lead manager is Brain Weinstein. It also has a yield of 3.07%. This yield is distributed on monthly basis. The 12b1 fee is 0.25% and the sales load is 4%. This bond mutual fund has an average coupon of 2.02%.

Investors can start invest in this fund with a minimum initial purchase of $1.000. This BPRAX fund is available for purchase from 98 brokerages. The 3-year beta risk is 0.89. The other classes of this fund are Class B (BPIBX), Class C (BPRCX) and Institutional Class (BPRIX).

5. Hartford Inflation Plus A (HIPAX)

The Hartford Inflation Plus fund invests most of its net assets in U.S. dollar-denominated inflation-protected debt securities issued by the U.S. Treasury. It may invest <35% of its net assets in other debt sectors such as foreign debt and non-dollar securities.

Hartford Inflation Plus A
Since its inception, this best inflation protected bond fund has recorded 7 years of positive return and 2 years of negative return. This top bond fund has YTD return of 1.76%. It has 3-year annualized return of 10.83%. Morningstar analysts gave this fund Neutral rating and 3-stars rating. Based on the load adjusted return, the fund has returned 9.15% over the past 3-year. The fund has total net assets of $2.35 billion.

As of March 5, 2012, this mutual fund has a new manager, Lindsay Thrift Politi. She is the Vice President and Portfolio Manager of Wellington Management. The annual holdings turnover is quite high (232.0%) compared to the average in the category (113.79%). The fund has a total of 34 holdings. The yield to maturity is 1.58%.

6. American Century Inflation-Adjusted Bond (ACITX)

The American Century Inflation-Adjusted Bond fund utilizes most of assets to buy inflation-adjusted securities issued by the U.S. Treasury, U.S. government agencies and instrumentalities, and corporations. It may also invest some of assets in regular U.S. Treasury or other U.S. government bond.

The fund management team consists of Robert V. Gahagan, Brian Howell, Jim Platz, and Jesse Singh. The fund was introduced to investors in February 1997. It currently has total net assets of $5.04 billion. The fund distributed a dividend yield of 3.47% for the past year. The annual expense ratio of this fund is 0.48%. The fund can be purchased from 116 brokerages.

Top 10 Government Bond Mutual Funds 2012

This inflation protected bond fund is ranked with 3-stars rating by Morningstar. It also has Bronze rating. The 5-year annualized return of this American Century fund is 7.63%.

7. Delaware Inflation Protected Bond A (DIPAX)

Rated with 3 stars rating, this Delaware Inflation Protected Bond fund invests mainly in inflation-indexed bonds issued by the U.S. government. It is managed by Roger A. Early, and Paul Grillo since 2007. The fund has $484 million total net assets. The annual turnover rate is 157%.

This top performer inflation-protected bond fund has returned 9.62% over the past 1 year, 8.59% over the past 3 year and 7.62% over the past 5 year. The minimum initial investment is $1,000.

8. Nuveen Inflation Protected Securities A (FAIPX)

Nuveen Inflation Protected Securities A
The investment objective Nuveen Inflation Protected Securities fund is to provide total return while providing protection against inflation. The current yield is 2.97%. Its expense ratio is 0.85%. This inflation protected bond fund is open to new investors. Investor can start investing in this fund with $3,000 initial funding.

The top 4 sectors of its holdings are: U.S. Treasury Inflation-Protected (83.52%), Non-Agency Residential MBS (2.97%), Commercial MBS (1.85%), and Government-Related (1.08%). The annual holding turnover rate is 45% which is lower than average category of 118%.

9. T. Rowe Price Inflation Protected Bond (PRIPX)

This T. Rowe Price Inflation Protected Bond fund is part of no load mutual fund. The expense ratio fee is only 0.50%. It also has a very low annual holdings turnover rate of 18%. The yield is only 0.83%. This PRPX fund has total net assets of $516 million. Daniel O. Shackleford is the fund manager since 2002.

10. Dreyfus Inflation-Adjusted Sec Inv (DIAVX)

This Dreyfus Inflation-Adjusted Securities fund uses its assets to buy inflation-indexed securities issued by U.S. Government and some foreign government. The fund CUSIP is 261967822. The current yield is 2.99%. It also has $327 million total net assets. This no load fund is opened to new investors.

This DIAVX fund has used Barclays Capital U.S. Treasury Inflation Protected Securities Index as its benchmark. The fund has a beta of 1.14. As of April 2012, the average effective duration is 8.3 years, and the average effective maturity is 9.2 years.

Disclosure: No Position

Other Bond Funds:
Fund Performance

NoNameTicker1 Year Return %3 Year Return %5 Year Return %10 Year Return %Expense Ratio
1DFA Inflation-Protected Securities IDIPSX15.46%11.92%8.34%-0.13%
2American Indep US Infl-Idx AFHINX14.61%11.40%8.09%7.50%0.79%
3PIMCO Real Return APRTNX12.81%13.12%7.95%7.42%0.85%
4BlackRock Inflation Protected Bond Inv ABPRAX12.65%10.38%7.82%-0.86%
5Hartford Inflation Plus AHIPAX13.97%10.83%7.82%-0.85%
6American Century Infl-Adj Bond InvACITX14.16%10.57%7.63%7.08%0.48%
7Delaware Inflation Protected Bond ADIPAX11.58%10.33%7.54%-0.82%
8Nuveen Inflation Protected Securities AFAIPX13.74%11.75%7.42%-0.86%
9T. Rowe Price Inflation Protected BdPRIPX13.09%10.62%7.40%-0.53%
10Dreyfus Inflation-Adjusted Sec InvDIAVX13.93%10.60%7.39%-0.73%
11TIAA-CREF Inflation Link Bd RetailTCILX14.04%10.69%7.34%-0.47%
12MassMutual Premier Infl-Prot and Inc AMPSAX14.16%10.68%7.19%-0.96%

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