High yield securities are an excellent choice for investors who are not risk averse and who seek current income rather than equity growth. Such securities include corporate bonds with lower credit ratings, convertible securities and preferred stock, all of which carry a significant amount of risk. Mutual funds are the best way to invest in this category as they reduce the risk involved by holding a well diversified portfolio. They may also provide capital growth as a secondary objective and aid portfolio diversification.
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, then click here.
ING High Yield Bond A (IHYAX) invests the majority of its assets in high-yield bonds. The fund may invest a relatively smaller proportion of its assets in common and preferred stocks, government and money market securities. The high yield mutual fund has a ten year annualized return of 5.47%.
Randall Parrish is the fund manager and he has managed this high yield mutual fund since 2007.
Invesco High Yield A (AMHYX) seeks both current income and capital growth. At least 80% of its assets are used to purchase high yield securities such rated below investment grade. Up to 25% of its assets are invested in foreign securities. The high yield mutual fund has a five year annualized return of 6.65%.
As of June 2010, this high yield mutual fund held 304 issues, with 1.33% of its total assets invested in Nielsen Fin Llc/ Nielsen Fin Amh Hldgs.
Rydex High Yield Strategy A (RYHDX) invests in high yield debt securities. The fund may also invest in securities which as a whole mimic the performance of the U.S and Canadian high yield bond markets. These securities must have economic features similar to these markets. The high-yield mutual fund returned 20.58% over the last one year period.
The high yield mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.54% compared to a category average of 1.20%.
John Hancock2 High Yield 1 (JIHDX) seeks high total return. It invests the majority of its assets in corporate bonds, preferred stocks, government and asset backed securities. It may purchase foreign bonds as well as fixed-income securities denominated in foreign currencies. The high yield mutual fund has a three year annualized return of 7.76%.
Stephen A. Walsh is the fund manager and he has managed this high yield mutual fund since 2006.
Federated High-Income Bond A (FHIIX) invests heavily in a wide range of high-yield corporate bonds with lower ratings. The fund may also utilize synthetic instruments such as derivatives to fulfill its investment objectives. The high yield mutual fund returned 21.39% over the last one year period.
The high yield mutual fund has a minimum initial investment of $1,500 and an expense ratio of 1.23% compared to a category average of 1.20%.
To view the Zacks Rank and past performance of all high yield mutual funds, then click here.
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/mutualfund/
