TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

TheStreet.com Ratings has assigned "buy" grades to three of five newly rated mutual funds that invest in bonds.

Among the funds, which have at least three years of performance data, one received our top rating of "excellent." We deemed two more "good." The other two earned "sell" grades.

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With an initial grade of A-plus, the

American Century NT Diversified Bond Fund

(ACLDX) - Get American Century NT Divers Bd Instl Report

has returned 6.9%, on average, a year in the past three years and 6.1% in the 12 months through May. Almost half of the fund's assets are split between government and corporate bonds. Mortgage and municipal debt make up another 41%.

This no-load fund holds the fixed income securities of

Morgan Stanley

(MS) - Get Morgan Stanley (MS) Report



(T) - Get AT&T Inc. Report



(ORCL) - Get Oracle Corporation Report

, and

Bank of America

(BAC) - Get Bank of America Corp Report


We initiated coverage of the second-highest ranked fund, the

State Farm Bond Fund


, with a grade of B-plus. This investment-grade bond fund has a 3% front load that works against its 6% average annual return during the past three years. Among the fund's 60% corporate debt holdings, standout names include


(KO) - Get Coca-Cola Company Report


Eli Lilly

TheStreet Recommends

(LLY) - Get Eli Lilly and Company (LLY) Report

, and


(MMM) - Get 3M Company Report


The last of the "buy"-rated funds, the

State Farm Tax Advantaged Bond Fund


, starts out with a B grade. This fund also has a 3% front load. The portfolio of U.S. municipal debt returned 5.1% annually, on average, in the past three years.

Among the two funds with "sell" ratings, the

UBS PACE Select Advisors Trust High Yield Investments Fund

(PHIAX) - Get PACE High Yield A Report

earned a D grade. The fund returned 1.4% annually, on average, in the past three years, including a loss of 4.3% in the 12 months through May. This corporate debt fund charges a high front load of 4.5% and holds securities issued by


(F) - Get Ford Motor Company Report



(OI) - Get Owens-Illinois, Inc. Report

, and

El Paso



At an initial rating of D-minus, the other "sell"-rated bond fund is the

RidgeWorth Seix Floating Rate High Income Fund

(SFRAX) - Get Virtus Seix Float Rate High Inc A Report

. The fund charges a 2.5% front load and has lost 8.1% in the past year and 0.6% on average in each of the past three years.

For more information, check out an

explanation of our ratings


Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.