My Pick: BTTRX American Century Target Maturity 2025/Inv
The first two funds picked, Mid Cap Blend and Global Equity, might be deemed by some as riskier than the typical stock pick. To further diversify, and hopefully offset some of the risk, the next fund I will add to this hypothetical portfolio will be a bond fund. By picking Government bonds, credit risks are reduced. Besides, if the US defaults on its debt, we will likely have more pressing concerns than the performance of this particular fund. Also, since we added a solid international funds, as money pours out US securities, it should poor into the Global fund we picked. Well, it might. Anyway, bonds with longer duration tend to react more to changes in interest rates, so this is not the least risky bond fund category.
So, I pull up no-load, no fees and sort by 3 year performance. BTTRX comes up as the top performer by a good margin over 10, 5 and 3 year ranges. It has slightly underperformed BTTTX over the last year and is actually down slightly for the year, but not by much and BTTTX is only up 0.83%.
There are no other funds in this category that I like. The one downside to these funds is that the minimum initial investment is $2500, compared to $1000 for each of our first two picks. So I checked and all the other funds in this category that have performed decently have a $2500 initial investment or higher
Expenses are the exact same, but BTTRX has a 26% turnover rate compared to BTTTX at 10%. Both funds are managed by the same manager and team (Jeremy Fletcher).
Either option would work as expenses, turnover, performance are all relatively close. In this case, I am choosing the fund with the better long term performance record: BTTRX. Searching for all funds available in this category through Etrade, these are still the best options, so even if you are not looking to contribute additional small amounts, these are worth considering if you are looking for a Long Term Government Bond mutual fund.