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Mutual Funds

Your One-Stop Solution

Our all-in-one bond fund picks.

If you'd rather not decide whether to load up on Treasuries or high-grade corporates, Ginnie Maes or foreign bonds, pristine-quality bonds or junk, then go for one fund that invests in all corners of the fixed-income market. T. Rowe Price Spectrum Income (symbol RPSIX) dips a finger into every part of the bond market by investing in a basket of other Price funds. It takes a relatively aggressive approach: At last report, the fund held 27% of its assets in junk bonds, 16% in foreign bonds and 15% in income-paying stocks. Still, Spectrum Income lost just 9% last year, besting the average multisector bond fund by six percentage points. The fund yields 5.9%.

Although untested, T. Rowe Price Strategic Income (PRSNX) looks promising. The fund, which launched in December, will invest largely in the same sectors as Spectrum. But manager Steve Huber will buy individual bonds rather than invest through other Price funds. "This fund will have the full menu of opportunities available to it," says Price fixed-income director Mary Miller.

Aggressive funds often lose the most in a downturn but also rebound with the most ferocity. That may be the case with Kiplinger 25 member Loomis Sayles Bond (LSBRX), a go-anywhere fund that tumbled 22% in 2008. The fund's 60% stake in bonds rated triple-B (the lowest investment-grade category) and lower caused much of the damage, but could also fuel a big recovery. Between mid December, when junk bonds began to bounce back, and January 9, Loomis Sayles gained 12%, nearly double the gain of the average flexible bond fund. The fund yields a hearty 11.8%.

Download data for the 140 biggest taxable-bond funds and the 77 biggest national municipal-bond funds.