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Mutual funds having a significant exposure to diversified bonds are excellent choices for investors seeking steady returns with a relatively low level of risk. Investing in funds, which maintain a portfolio of bonds issued across a wide range of market sectors, also reduces sector-specific risk. Moreover, investing in diversified bond funds is preferred to individual bond investing, as building a portfolio of the second type may prove to be relatively more expensive. A higher level of liquidity also makes diversified bond funds more attractive. Below we share with you three best-ranked diversified bond mutual funds . Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. PIMCO Fixed Income SHares M (MUTF: FXIMX ) seeks to maximize total return with capital preservation. FXIMX may invest 100% of its assets in mortgage- and other asset-backed securities that are believed to provide a fixed level of income. These securities include commercial mortgage-backed securities, collateralized mortgage obligations and mortgage pass-through securities. The PIMCO Fixed Income SHares M fund returned 7% over the past one year. Curtis A. Mewbourne is the fund manager of FXIMX since 2009. Voya Intermediate Bond Fund A (MUTF: IIBAX ) invests a major portion of its assets in investment-grade bonds including corporate, government and mortgage bonds. IIBAX seeks to provide maximum total return. The Voya Intermediate Bond A fund returned 2.7% in the last one-year period. IIBAX has an expense ratio of 0.66% compared to the category average of 0.82%. PIMCO Investment Grade Corporate Bond Fund A (MUTF: PBDAX ) seeks total return along with capital preservation. PBDAX invests a large portion of its assets in investment grade debt securities of varying maturities that may be represented by derivative instruments. PBDAX may invest a maximum 15% of its total assets in junk bonds, rated B or higher by Moody’s. The PIMCO Investment Grade Corporate Bond A fund returned 2.8% over the past one year. As of December 2015, PBDAX held 1111 issues with 17.05% of its assets invested in Cdx Ig25 5y Ice. Original Post