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|
|T. Rowe Price High Yield Fund||6.15%|
|Delaware High Yield Opportunity||6.12%|
|AllianzGI High Yield Bond A||5.51%|
|J Hancock3 Core High Yield||5.46%|
|Waddell & Reed Advantage High Income||5.31%|
T. Rowe Price High-Yield (PRHYX) seeks high current income. The fund invests the majority of its assets in a wide range of high yield corporate bonds, preferred stocks and convertible securities. The average maturity range of the portfolio is between 5 to 10 years. The high yield mutual fund returned 11.36% over the last one year period.
The high yield mutual fund has an expense ratio of 0.74% compared to a category average of 1.10%.
Delaware High-Yield Opportunities A (DHOAX) 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 12.06% over the last one year period.
Thomas H. Chow is the fund manager and he has managed this high yield mutual fund since 2012.
AllianzGI High Yield Bond Administrative (AYBVX) seeks growth in capital and current income. A large share of its assets is invested in junk bonds. It also invests in a wide range of securities which provide high yield. The high yield mutual fund returned 10.18% over the last one year period.
As of July 2013, this high yield mutual fund held 137 issues, with 1.21% of its total assets invested in J2 Global 8%.
JHancock3 Core High Yield A (JYIAX) invests a large portion of its assets in corporate debt securities. A maximum of 30% of its assets are invested in debt securities which are issued from abroad, including emerging markets. This high yield mutual fund returned 10.19% over the last one year period.
The high yield mutual fund has an expense ratio of 1.18% compared to a category average of 1.10%.
Waddell & Reed High-Income A (UNHIX) seeks a combination of capital growth and current income. A majority of its assets are predominantly invested in low quality debt securities. Investments can also be made in any fixed income security issued by any company regardless of its market cap and maturity period. This high yield mutual fund returned 14.16% over the last one year period.
William M. Nelson is the fund manager and he has managed this high yield mutual fund since 2008.
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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