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||6.15%|
|Guggenheim High Yield A||6.03%|
|Waddell & Reed High-Income A||5.70%|
|Invesco High Yield A||5.42%|
|USAA High Income||5.35%|
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. These securities may be junk bonds or those that are not rated by key credit rating agencies. The high yield mutual fund returned 7.52% over the last one year period.
The high yield mutual fund has an expense ratio of 0.74% compared to a category average of 1.09%.
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 8.52% over the last one year period.
B. Scott Minerd is the fund manager and he has managed this high yield mutual fund since 2012.
Waddell & Reed High-Income A (UNHIX) invests a large share of its assets in a wide range of high-yield, fixed-income securities. It purchases low-quality debt instruments, the risk associated with which is in consonance with the fund’s objective. This high yield mutual fund returned 9.51% over the last one year period.
The high yield mutual fund has an expense ratio of 1.03% compared to a category average of 1.09%.
Invesco High Yield A (AMHYX) seeks total return. The fund invests a majority of its assets in debt instruments rated below investment grade. A maximum of 25% of its assets are utilized to purchase foreign securities. This high yield mutual fund returned 5.64% over the last one year period.
As of September 2013, this high yield mutual fund held 461 issues, with 1.06% of its total assets invested in Cricket Comms.
USAA High Income (USHYX) aims to provide total return through current income and capital growth. It focuses on investing in non-investment-grade debt securities. It may invest without limit in dollar-denominated foreign securities. This high yield mutual fund returned 6.76% over the last one year period.
Julianne Matthew Bass is the fund manager and has managed the 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.
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Read the analyst report on PRHYX
Read the analyst report on SIHAX
Read the analyst report on UNHIX
Read the analyst report on AMHYX
Read the analyst report on USHYX
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