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

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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

CNI Charter High Yield Bond

8.98%

Waddell & Reed High-Income A

8.52%

Northern High Yield Fixed Income

8.00%

Lord Abbett High Yield A

7.54%

Federated High-Income Bond A

7.40%

 

CNI Charter High Yield Bond (CHYIX) seeks maximum total return. The fund invests the majority of its assets in junk bonds. Corporate bonds and debentures, convertible and preferred securities and government securities constitute its primary investments. This high yield mutual fund returned 5.73% over the last one year period.

Richard J. Lindquist is the fund manager and he has managed this high yield mutual fund since 2000.

Waddell & Reed High-Income A (UNHIX) invests the majority of its assets in a wide range of high yield debt instruments, the risk associated with which is in consonance with the fund’s objective. The fund purchases fixed-income securities without regard to their maturity period. This high yield mutual fund returned 7.92% over the last one year period.

The high yield mutual fund has a minimum initial investment of $500 and an expense ratio of 1.08% compared to a category average of 1.15%.

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. This high yield mutual fund returned 4.75% over the last one year period.

Richard J. Inzunza is the fund manager and he has managed this high yield mutual fund since 2007.

Lord Abbett High Yield A (LHYAX) invests the majority of its assets in junk bonds, including those issued by companies and convertible securities. Not more than 20% of its assets are utilized to purchase foreign securities. This high yield mutual fund returned 4.86% over the last one year period.

As of March 2012, this high yield mutual fund held 456 issues, with 0.92% of its total assets invested in Ford Motor Credit Co 12%.

Federated High-Income Bond A (FHIIX) seeks a high current level of current income. The fund invests heavily in a wide range of high yield corporate bonds. These include domestic and foreign debt securities as well as those issued from emerging markets. This high yield mutual fund returned 6.56% over the last one year period.

The high yield mutual fund has a minimum initial investment of $500 and an expense ratio of 1.08% compared to a category average of 1.16%.

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. o o for breakfast or a drinkclick 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 CHYIX

Read the analyst report on UNHIX

Read the analyst report on NHFIX

Read the analyst report on LHYAX

Read the analyst report on FHIIX

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