Investors desperate to find safe investments caught a "Hail Mary" pass with long bonds in November. All 10 of the best-performing fixed-income funds from Oct. 31 to Nov. 28 benefited from heavy exposure to the long end of the yield curve.

During November, prices soared and yields dropped. Now at record lows, generic U.S. government bond yields sank to sub-1960 levels. Yields of 2.69% on the 10-year bond and 3.21% on the 30-year bond represent respective declines of 126 and 115 basis points from the close on Oct. 31.

The fed funds target rate, at 1% since Oct. 29, had been held at this level for a full year starting in June 2003 to fight off the last slump. Rock-bottom yields of 0.02% on one-month Treasury bills and 0.05% on three-month T-bills signal that the

Federal Reserve

is tapped out when it comes to lowering short-term interest rates to stimulate the economy.

To inject more liquidity into the banking system, the Fed may be forced to buy not just short-term Treasuries, but also long-term U.S. government debt, an action Fed Chairman Ben Bernanke suggested may be necessary. Fed purchases of mortgage debt are also expected to increase demand for long-term bonds and the funds that hold these securities.

The best-performing fixed-income funds in November were the

SEI Institutional Investment Trust - Extended Duration Fund


, up 34.44%;

PIMCO Extended Duration Fund

(PEDIX) - Get Report

, up 24.59%;

Vanguard Extended Duration Treasury Index Fund

(VEDIX) - Get Report

, up 22.34%;

American Century Target Maturities Trust Series 2025 Fund

(BTTRX) - Get Report

, up 20.95%; and

Rydex Series Funds - Government Long Bond 1.2x Strategy Fund

(RYGBX) - Get Report

, up 20.87%.



for an explanation of our ratings.

Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by, 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.