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
.
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 14.88% 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 1.12%.
Federated High-Income Bond A
(
FHIIX
) 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 13.82% over the last one year
period.
Mark E. Durbiano is the fund manager and he has managed this
high yield mutual fund since 1987.
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 14.13% 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%.
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 13.89% over the last one year period.
The high yield mutual fund has a minimum initial investment of
$2,500 and an expense ratio of 0.84% compared to a category average
of 1.12%.
Transamerica High Yield Bond A
(
IHIYX
) seeks high current income. The fund 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 14.52% over the
last one year period.
Bradley Beman is the fund manager and he has managed this high
yield mutual fund since 1998.
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
(FHIIX): ETF Research Reports
(IHIYX): ETF Research Reports
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