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 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.
Sec 30 Day Yield
Fairholme Focused Income
Lord Abbett High Yield A
Guggenheim High Yield A
Delaware Pooled High-Yield Bond
Northern High Yield Fixed Income
Fairholme Focused Income (FOCIX) invests in securities issued by 15 to 50 issuers. Securities in which the investments are made constitute of bank debt, domestic and international corporate debt securities, and 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.
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.
As of May 2013, this high yield mutual fund held 166 issues, with 2.19% of its total assets invested in Vwr Fdg 144A 10.75%.
Delaware Pooled High-Yield Bond (DPHYX) seeks high total return. The fund focuses on investing in bonds rated investment grade by S&P or other nationally recognized statistical rating organizations. This high yield mutual fund returned 11.06% over the last one year period.
The high yield mutual fund has an expense ratio of 0.58% compared to a category average of 1.12%.
Northern High Yield Fixed Income (NHFIX) seeks high current income. The fund invests a large proportion of its assets in corporate bonds rated below investment-grade and other fixed-income securities. The fund focuses on purchasing domestic debt securities but may also invest in foreign debt instruments. This high yield mutual fund returned 10.45% over the last one year period.
Richard J. Inzunza is the fund manager and he has managed this high yield mutual fund since 2007.
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.
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