Pass on Wasatch/Hoisington U.S. Treasury and Other Treasury Funds

These sizzling funds top the charts, but opportunities are limited, and they carry a lot of risk.

Is it any wonder that Treasury bonds are among the hottest investments on the planet? With Europe in crisis, China's economy slowing and the U.S. economy looking wobbly, investors have been snapping up Treasuries, pushing their prices up and their yields down and propelling long-term government bond funds to the top of the fixed-income charts for the past year. Over the past 12 months through August 14, the average long-term government bond fund gained 18.9%, topping the Barclays U.S. Aggregate Bond index, a barometer of the overall bond market, by 14.0 percentage points.

Among bond funds, long-term Treasury products have benefited the most from falling yields (bond prices move in the opposite direction of yields). The 30-year Treasury yield now sits at 2.8%, down from 3.8% a year earlier. (Unless otherwise indicated, all data and returns are through August 10.)

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Nellie S. Huang
Senior Associate Editor, Kiplinger's Personal Finance

Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.