(MONEY Magazine) – It's been a tough 12 months for Ginnie Maes and Ginnie Mae funds. Like most bonds, the government-backed mortgage securities were hit hard by the Russian economy's collapse last year as investors hurried to buy ultrasafe U.S. Treasuries. They also suffered from last year's mortgage refinancing boom: When homeowners prepay their loans, Ginnie Mae investors get their money back sooner than expected--and must reinvest it at lower rates. Over the past 12 months, the average Ginnie Mae fund has lost 1.2%.

With interest rates climbing again, though, many fixed-income experts are saying this is an excellent time to consider Ginnie Maes.

The higher interest rates are expected to end the wave of refinancing. And as prepayment risk subsides, analysts argue, Ginnie Mae funds, yielding 6% on average, look like a better value than intermediate-term government bond funds, which are yielding 5.6%.

When shopping for a Ginnie Mae fund, the basic bond fund rules apply, says Morningstar analyst Eric Jacobson: "Look for a no-load fund with a good performance record and reasonable expenses." We found three.

--Lexington Ginnie Mae Income. Manager Denis Jamison trades often to take advantage of changes in interest rates; that strategy adds slightly to fund expenses but pays off nonetheless: The fund's 10-year annualized return of 7.9% is No. 2 in the category.

--Vanguard Ginnie Mae. Manager Paul Kaplan's gift is spotting the best values among the various types of Ginnie Maes. He is also helped by super-low expenses (a Vanguard specialty) of 0.3% vs. 0.7% for his typical peer.

--Fidelity Mortgage Securities. Manager Tom Silvia boosts the fund's returns by keeping about 16% of his assets in slightly riskier commercial mortgages. His gambles have paid off: The fund's 6.5% average return for the past five years is tops in the category. --KEVIN MAX