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

Zacks Investment Research

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.

Mutual Fund

Sec 30 Day Yield

Waddell & Reed High-Income A

8.52%

Delaware High-Yield Opportunities A

7.98%

Lord Abbett High Yield A

7.54%

Thrivent High Yield A

7.33%

Fidelity High Income

7.27%

 

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 7.24% 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%.

Delaware High-Yield Opportunities A (DHOAX) seeks total return with current income. The fund utilizes a large share of its assets to purchase fixed income securities which have been rated BBB- or lower by S&P, Ba3 by Moody’s. This high yield mutual fund returned 4.76% over the last one year period.

Kevin P. Loome 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 corporate debt securities and convertible instruments. Not more than 20% of its assets may be utilized to purchase foreign securities, including those issued from emerging markets. This high yield mutual fund returned 5.55% over the last one year period.

The high yield mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.97% compared to a category average of 1.16%.

Thrivent High Yield A (LBHYX) seeks high current income. The fund invests a large share of its assets in junk bonds, debentures and other debt securities, as well as preferred stocks. The fund purchases securities without regard to their maturity period. This high yield mutual fund returned 6.53% over the last one year period.

As of January 2012, this high yield mutual fund held 256 issues, with 0.98% of its total assets invested in Cdx Hy 17 5 yr Offset.

Fidelity High Income (SPHIX) invests heavily in debt securities which generate income, focusing on acquiring those with relatively lower ratings. The fund may also purchase securities which do not generate income, including common stocks. This high yield mutual fund returned 5.42% over the last one year period.

Fred Hoff is the fund manager and he has managed this high yield mutual fund since 2000.

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.

Read the analyst report on UNHIX

Read the analyst report on DHOAX

Read the analyst report on LHYAX

Read the analyst report on LBHYX

Read the analyst report on SPHIX

Zacks Investment Research



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