High yield securities are the preferred option for investors who
have a reasonable appetite for risk and who are willing to forgo
equity growth for current income. This category of securities
comprises of corporate bonds of low quality, convertible securities
and preferred stock, all of which carry a significant amount of
risk. Mutual funds are a prudent method to invest in this class of
funds as they significantly reduce the risk involved by holding a
well diversified portfolio. Such funds may also seek capital
appreciation as a secondary objective.
Below we will share with you 5 top rated high yield mutual
funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect
these mutual funds to outperform their peers in the future. To view
the
Zacks Rank
and past performance of all high yield funds, then
click here.
Federated High-Income Bond A
(FHIIX)
seeks current income. The fund invests heavily in a wide range of
high-yield corporate bonds with lower ratings. The fund may also
utilize synthetic instruments such as derivatives to fulfill its
investment objectives. This high yield mutual fund returned 5.44%
over the last one year period.
Mark E. Durbiano is the fund manager and he has managed this
high yield mutual fund since 1987.
Vanguard High-Yield Corporate
(VWEHX)
invests the majority of its assets in corporate bonds assigned the
lowest investment grade rating by a renowned bond rating agency. Up
to 20% of its assets may be utilized to hold securities rated below
investment grade. The high yield mutual fund has a three year
annualized return of 19.17%.
As of September 2011, this high yield mutual fund held 353
issues, with 1.28% of its total assets invested in Cit Grp 7%.
Rydex High Yield Strategy A
(RYHDX)
seeks to mimic the performance of the high yield bond market. The
fund invests in high yield debt securities. The fund may also
invest in securities which as a whole mimic the performance of the
U.S and Canadian high yield bond markets. This high yield mutual
fund returned 5.17% over the last one year period.
The high yield mutual fund has a minimum initial investment of
$2,500 and an expense ratio of 1.54% compared to a category average
of 1.14%.
Fidelity Focused High Income
(
FHIFX)
primarily invests in income generating debt securities. The fund
may invest in securities which do not yield income, such as common
stocks. The high yield mutual fund has a five year annualized
return of 6.03%.
Matt Conti is the fund manager and he has managed this high
yield mutual fund since 2004.
T. Rowe Price High-Yield
(
PRHYX)
seeks high current income. The fund invests a large proportion of
its assets in a wide range of high yield corporate bonds, preferred
stocks and convertible securities. The high yield mutual fund has a
ten year annualized return of 8.08%.
The high yield mutual fund has a minimum initial investment of
$2,500 and an expense ratio of 0.74% compared to a category average
of 1.14%.
To view the Zacks Rank and past performance of all high yield
mutual funds, then
click here.
About Zacks Mutual Fund Rank
By applying the Zacks Rank to mutual funds, investors can find
funds that not only outpaced the market in the past but are also
expected to outperform going forward. Learn more about the Zacks
Mutual Fund Rank at
http://www.zacks.com/funds.
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