High yield bond mutual funds provide the best choice for those looking to invest in below investment-grade bonds, also known as junk bonds. Though bonds that are rated below investment grade are believed to be riskier than investment grade bonds, a well diversified portfolio of these securities reduce the risk of the portfolio. Thus mutual funds maintaining a portfolio of these securities are the best for investors as they allocate their assets in such securities from a wide range of sectors.
Moreover, these funds are expected to provide better returns than those investing in securities with higher ratings, including government and corporate bonds. Also, due to their higher yield feature, junk bonds are believed to be less susceptible to interest rate fluctuations.
Below we share with you 3 top-ranked high-yield bond mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all high-yield bond mutual funds, investors can click here to see the complete list of high-yield bond mutual funds .
Wells Fargo Advantage Short-Term High-Yield Bond Investor ( STHBX ) seeks total return through high current income and capital growth. STHBX invests a major portion of its assets in corporate debt securities that are rated below investment grade. STHBX may also invest a maximum of one-fourth of its assets in non-US securities that are denominated in the US dollar. STHBX invests in securities that include corporate bonds and bank loans having fixed, floating or variable rates. The Wells Fargo Advantage Short-Term High-Yield Bond Investor fund has returned 2.5% in the year-to-date frame.
STHBX has an expense ratio of 0.84% as compared to the category average of 1.05%.
Westcore Flexible Income Retail ( WTLTX ) invests the lion's share of its assets in securities that are believed to provide positive returns. WTLTX primarily focuses on bonds and may also invest in convertible bonds and equity securities. WTLTX maintains a portfolio to provide total rate of return over the long run through capital preservation. The Westcore Flexible Income Retail fund has returned 1.7% in the year-to-date frame.
Mark R. McKissick is one of the fund managers of WTLTX since 2003.
SSgA High Yield Bond N ( SSHYX ) seeks to provide maximum total return. SSHYX invests a large chunk of its assets in fixed income producing high yield bonds. SSHYX may also invest in debt securities with floating interest rates. The fund allocates a significant portion of its assets in securities listed in the Barclays U.S. Corporate High-Yield Bond Index. SSHYX invests in securities irrespective of their credit qualities and durations. The SSgA High Yield Bond N fund has returned 1.2% in the year-to-date frame.
As of August 2015, SSHYX held 252 issues with 1.46% of its assets invested in Vpi Escrow 144A 6.375%.
To view the Zacks Rank and past performance of all high-yield bond 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 .
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
