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.
Sec 30 Day Yield
Northern High Yield Fixed Income
Delaware High-Yield Opportunities A
USAA High Income
Guggenheim High Yield A
Northern High Yield Fixed Income ( NHFIX) 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 11.84% over the last one year period.
Richard J. Inzunza is the fund manager and he has managed this high yield mutual fund since 2007.
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 12.46% over the last one year period.
The high yield mutual fund has an expense ratio of 1.11% compared to a category average of 1.14%.
USAA High Income (USHYX) invests the majority of its assets in dollar denominated securities which generate high yields, convertibles, leveraged loans and preferred stocks. The fund focuses on purchasing junk bonds. It may invest a substantial amount of its assets in dollar denominated foreign securities. This high yield mutual fund returned 12.27% over the last one year period.
Julianne Matthew Bass is the fund manager and he has managed this high yield mutual fund since 2007.
Northeast Investors (NTHEX) seeks high income. The fund 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 12.11% over the last one year period.
As of December 2012, this high yield mutual fund held 73 issues, with 8.77% of its total assets invested in Citigroup Inc.
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 13.11% over the last one year period.
The high yield mutual fund has an expense ratio of 1.17% compared to a category average of 1.14%.
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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