For the average investor, high yield mutual funds are the best
method to invest in bonds rated below investment grade, popularly
known as junk bonds. This is because these funds hold a wide
range of such securities, significantly reducing portfolio risk.
In addition, these funds provide better returns than investments
with higher ratings, including government and corporate bonds.
Further, because the yield from such bonds is higher than
investment grade securities, these investments are less
susceptible to interest rate fluctuations.
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, investors can
click here to see the complete list of funds
.
Putnam High Yield Advantage A
(PHYIX) invests a large share of its assets in domestic bonds
rated below investment grade. The maturity period of these
securities are three years or more. The fund may invest in
derivatives to reduce risk or enhance returns. This high yield
mutual fund returned 18.56% over the last one year period.
Robert L. Salvin is the fund manager and he has managed this
high yield mutual fund since 2005.
Columbia High Yield Opportunity A
(COLHX) seeks total returns. A majority of its assets are
invested in high yield debt securities issued by domestic and
foreign companies including companies from emerging markets. The
high yield mutual fund returned 19.8% over the last one year
period.
The high yield mutual fund has a minimum initial investment of
$2,000 and an expense ratio of 1.11% compared to a category
average of 1.13%.
American Century High-Yield
(ABHIX) primarily invests in corporate bonds which provide high
yields and other debt securities. A maximum of 40% of its assets
may be utilized to purchase foreign debt securities. This high
yield mutual fund returned 20.69% over the last one year
period.
G. David MacEwen is the fund manager and he has managed this
high yield mutual fund since 2008.
Invesco High Yield A
(AMHYX) seeks total return. The fund invests the majority of its
assets in debt securities rated below investment grade. Up to 25%
of its assets may be used to purchase foreign securities and up
to 15% may be invested in emerging market securities. This high
yield mutual fund returned 19.72% over the last one year
period.
As of June 2012, this high yield mutual fund held 421 issues,
with 0.81% of its total assets invested in Tutor Perini
7.625%.
Transamerica High Yield Bond A
(IHIYX) invests a large share of its assets in bonds with high
risk providing high returns. It may also invest in cash,
equivalent securities or short term debt instruments. This high
yield mutual fund returned 20.58% over the last one year
period.
The high yield mutual fund has a minimum initial investment of
$1,000 and an expense ratio of 1.17% compared to a category
average of 1.13%.
To view the Zacks Rank and past performance of all high yield
mutual funds, investors can
click here to see the complete list of funds
.
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
.
View All Zacks #1 Ranked Mutual Funds
(ABHIX): ETF Research Reports
(AMHYX): ETF Research Reports
(COLHX): ETF Research Reports
(IHIYX): ETF Research Reports
(PHYIX): ETF Research Reports
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