For investors looking for high returns than the normal yield would do well to select high yield mutual funds. The associated risk in these types of funds is also comparatively higher than other funds. This is because the instruments in which these funds are investing carry a risk of default as some of them may be below investment grade. Investors can maximize their total return by adding such funds in their portfolio as these funds provide better returns than investments with higher ratings.
Below we will share with you 5 top rated 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.
John Hancock Funds2 High Yield 1 (JIHDX) invests a large share of its assets in high yield instruments. The fund may invest in foreign bonds as well as fixed and floating rate loans. The average maturity period of its portfolio ranges from three to seven years. This high yield mutual fund returned 15.19% over the last one year period.
Stephen A. Walsh is the fund manager and he has managed this high yield mutual fund since 2006.
Waddell & Reed High-Income A (UNHIX) seeks high current income and capital growth. The fund purchases a wide range of debt securities of relatively lower quality. It may invest without limit in junk bonds. This high yield mutual fund returned 16.69% over the last one year period.
As of December 2012, this high yield mutual fund held 243 issues, with 2.06% of its total assets invested in Laureate Educ 144A 9.25%.
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 13.72% 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%.
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 13.00% over the last one year period.
Peter Ehret is the fund manager and he has managed this high yield mutual fund since 2001.
Western Asset Global High Yield Bond A (SAHYX) invests the majority of its assets in high yield bonds with relatively lower ratings. It may invest in both domestic and foreign securities and also in instruments backed by foreign governments. A maximum of 35% of its assets may be invested in sovereign debt instruments from emerging markets. This high yield mutual fund returned 14.37% over the last one year period.
The high yield mutual fund has an expense ratio of 1.09% 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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