Since I have focused so much on the stock side of things in previous posts (mainly because that is the area I invest in and research most often), I wanted to look at a few top bond funds. These funds invest solely in bonds and have proven to be very viable 
investment vehicles over the years.
1. Dodge and Cox Income Report (DODIX)- The managers of this fund have been around for a long time and have been very successful. This fund yields 4.99% and has an expense ratio of just 0.44%. The fund has a 5 star rating from morningstar.
2. Vanguard GNMA (VFIIX)- Vanguard's industry-best low expenses show up here, with this fund sporting rock-bottom expenses of 0.21%. The managers here do a great job of managing prepayment risk. VFIIX has very high standards for investing in very high-credit-quality bonds, so the volatility here is low. This fund receives 5 stars from morningstar.
3. American Funds High Income Trust (RITFX)- This high-yield offering has performed well in all markets in the past few years. The fund yields 7.8%, and has an expense ratio of just 0.42%. Management has experienced it all in the bond world, and has outperformed its peers in all situations. Morningstar rates this fund 5 stars.
4. Thompson Plumb Bond (THOPX)- This fund boasts the best return over a 5 year period of any short-term bond fund. The minimum investment is $2,500 and expenses are just 0.72%. The fund receives 5 stars from morningstar.
5. Delaware Diversified Income A (DPDFX)- This intermediate-term bond fund has had stellar results in the past few years. The fund has large stakes in emerging-markets debt, so this is not for the faint of heart. The expense ratio of 1.00% keeps this fund from ranking any higher on our list. Morningstar gives this fund 5 stars.
These five funds are some of the best performers from their specific categories. While I prefer keeping most of my money in equity funds, having a couple of high-quality bond funds is certainly a good way to diversify your portfolio. In times of economic instability you will likely wish you had a couple of top performing bond funds.
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