5 Highest Yielding Zacks #1 Ranked High Yield Bond Mutual Funds

Zacks

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 the 5 highest yielding Zacks #1 ranked 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.

Mutual Fund

Sec 30 Day Yield

Fairholme Focused Income

7.73%

Lord Abbett High Yield A

6.69%

Northeast Investors

6.65 %

Guggenheim High Yield A

6.32%

Delaware High-Yield Opportunities A

6.12%

 

Fairholme Focused Income (FOCIX) invests in securities issued by 15 to 50 issuers. Investments are made in bank debt, domestic and international corporate debt securities. The fund also purchases government and debt securities issued by domestic or foreign countries. The securities may also constitute convertible bond and securities. This high yield mutual fund returned 22.94% over the last one year period.

The high yield mutual fund has an expense ratio of 0.91% compared to a category average of 1.12%.

Lord Abbett High Yield A (LHYAX) seeks high current income and capital growth. The fund invests a large proportion of its assets in corporate bonds rated below investment-grade and convertible securities. A maximum of 20% of its assets are invested in foreign securities which are internationally traded. This high yield mutual fund returned 12.02% over the last one year period.

Steven F. Rocco is the fund manager and he has managed this high yield mutual fund since 2010.

Northeast Investors (NTHEX) focuses on investing in marketable securities of prominent firms. It primarily purchases debt securities rated below investment grade by any of the two major ratings firms. This high yield mutual fund returned 14.69% over the last one year period.

As of March 2013, this high yield mutual fund held 73 issues, with 8.75% of its total assets invested in Citigroup.

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 15.02% over the last one year period.

The high yield mutual fund has an expense ratio of 1.17% compared to a category average of 1.12%.

Delaware High-Yield Opportunities A (DHOAX) seeks total return. The fund invests in bonds providing high return with ratings equal to or below “BBB”. It may invest in both domestic and foreign securities issued by governments as well as in foreign corporate bonds. This high yield mutual fund returned 14.36% over the last one year period.

Thomas H. Chow is the fund manager and he has managed this high yield mutual fund since 2012.

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.

Read the analyst report on FOCIX

Read the analyst report on LHYAX

Read the analyst report on NTHEX

Read the analyst report on SIHAX

Read the analyst report on DHOAX

Zacks Investment Research



More From Zacks.com

Rates

View Comments (0)