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
Western Asset Global High Yield Bond A
Delaware Pooled High-Yield Bond
Northern High Yield Fixed Income
Delaware High-Yield Opportunities A
Putnam High Yield Advantage A
Western Asset Global High Yield Bond A ( SAHYX) invests the majority of its assets in high yield bonds and related securities. Up to 35% of its assets may also be utilized to purchase sovereign debt issued by governments from emerging markets. This high yield mutual fund returned 18.83% over the last one year period.
S. C. Leech is the fund manager and he has managed this high yield mutual fund since 2006.
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 17.78% 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) 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 15.25 % over the last one year period.
As of December 2012, this high yield mutual fund held 219 issues, with 0.90% of its total assets invested in Entrnmt Pptys Tr 7.75%.
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 17.40% over the last one year period.
Thomas H. Chow is the fund manager and he has managed this high yield mutual fund since 2012.
Putnam High Yield Advantage A (PHYIX) invests primarily in bonds issued by domestic companies rated below investment grade. The maturity period of these securities must be three years or longer. It may also utilize derivatives to manage risk or enhance returns. This high yield mutual fund returned 15.11% over the last one year period.
The high yield mutual fund has an expense ratio of 1.04% compared to a category average of 1.12%.
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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