High yield securities are the preferred options for investors who have a reasonable appetite for risk and who are willing to forgo equity growth for current income. This category of securities are composed of corporate bonds of low quality, convertible securities and preferred stock, all of which carry a significant amount of risk. Mutual funds are a prudent method to invest in this class of funds as they significantly reduce the risk involved by holding a well diversified portfolio. Such funds may also seek capital appreciation as a secondary objective.
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.
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. The average maturity range of the portfolio is between 5 to 10 years. The high yield mutual fund returned 10.49% over the last one year period.
The high yield mutual fund has an expense ratio of 0.74% compared to a category average of 1.10%.
Putnam High Yield A (PHIGX) invests heavily in securities rated below investment grade with maturity periods of three years or more. The fund may also utilize futures, options, warrants and swaps to minimize risk or to enhance portfolio returns. This high yield mutual fund returned 9.58% over the last one year period.
As of June 2013, this high yield mutual fund held 702 issues, with 0.57% of its total assets invested in Caesars Oper Escrow 144A 9%.
Consulting Group High Yield Investments (THYUX) seeks a high level of current income. The fund focuses on investing most of its assets in domestic junk bonds. It may utilize 20% of its assets to purchase foreign high yield bonds. This high yield mutual fund returned 10.29% over the last one year period.
Stephen A. Walsh is the fund manager and he has managed this high yield mutual fund since 2001.
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 10.45% over the last one year period.
The high yield mutual fund has an expense ratio of 0.75% compared to a category average of 1.10%.
Calvert High Yield Bond A (CYBAX) seeks a high level of current income with a secondary objective of capital growth. The fund focuses on purchasing high yield bonds, which also carry higher risk. These are usually bonds with intermediate maturity periods. This high yield mutual fund returned 10.16% over the last one year period.
Matthew Duch is the fund manager and he has managed this high yield mutual fund since 2010.
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 at http://www.zacks.com/funds.
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