Cara Esser: JPMorgan Government Bond provides exposure to government-backed mortgage securities. The longtime managers have a unique approach. The team targets a 5- to 5.5-year duration, unlike most of its peers which target duration based on an index or the managers' macroeconomic outlook. That stable duration target provides a predictable performance pattern for investors.
The team also approaches its mortgage selection differently than most peers. The team focuses on collateralized mortgage obligations over the more traditional pass-throughs. It also holds about a third of its allocation in Treasuries which helps to stabilize duration. Over the long term, the stable duration and strong mortgage selection has led to peer-beating returns. Over the trailing 10 years through November 2016, the fund beat 90% of its peers.
Add in a below average expense ratio and the fund earns a Morningstar Analyst Rating of Silver.