Investing in high yield securities needs an above average
appetite for risk as the probability of default is the highest in
these securities. These lower rated securities carry high coupon
yields to compensate investors for the associated risk. However,
they can maximize total returns by generating high interest
income and capital appreciation over the long term. Mutual funds
investing in these securities significantly reduce the associated
risk through diversification and should be a part of the
portfolio of every investor looking at maximum returns.
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.
Delaware Pooled High-Yield Bond
(DPHYX) invests heavily in securities that generate high and
stable income. It also focuses on corporate bonds rated "BB" or
lower as per S&P investment grade and those securities that
are backed by domestic government and related agencies. This high
yield mutual fund returned 15.31% over the last one year
period.
Thomas H. Chow is the fund manager and he has managed this
high yield mutual fund since 2012.
Loomis Sayles High Income A
(NEFHX) seeks high current income and capital growth. A minimum
of 65% of its assets may be used to purchase securities rated
below investment grade or dollar denominated foreign fixed-income
securities. This high yield mutual fund returned 16.72% over the
last one year period.
As of September 2012, this high yield mutual fund held 252
issues, with 3.54% of its total assets invested in Canada Govt
3%.
Waddell & Reed High-Income A
(UNHIX) invests the majority of its assets in a wide range of
fixed income securities that generates high yield and bear high
risk. It invests significantly in junk bonds. This high yield
mutual fund returned 16.57% over the last one year period.
The high yield mutual fund has an expense ratio of 1.08%
compared to a category average of 1.13%.
John Hancock Funds II High Yield 1
(JIHDX) seeks high risk adjusted return over medium to long term
period and invests heavily in high income securities. The fund
may utilize its assets to purchase foreign securities or invest
in fixed- and floating-rate loans. This high yield mutual fund
returned 14.91% over the last one year period.
Stephen A. Walsh is the fund manager and he has managed this
high yield mutual fund since 2006.
Guggenheim High Yield A
(SIHAX) invests the majority of its assets in a wide range of
debt securities with high risk and providing high returns. These
securities should not be among the top four long-term rating
categories as designated by a Nationally Recognized Statistical
Rating Organization (NRSRO). The high yield mutual fund returned
14.45% over the last one year period.
The high yield mutual fund has a minimum initial investment of
$100 and an expense ratio of 1.18% 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
(DPHYX): ETF Research Reports
(JIHDX): ETF Research Reports
(NEFHX): ETF Research Reports
(SIHAX): ETF Research Reports
(UNHIX): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment
Research