High yield securities are the preferred option for investors who have a reasonable appetite for risk and who are willing to forgo equity growth for current income. This category of securities comprises 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 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, then click here.
| Mutual Fund | SEC Yield |
| Transamerica High Yield Bond Fund | 9.03% |
| John Hancock2 High Yield 1 | 8.34% |
| ING High Yield Bond A | 8.13% |
| Invesco High Yield A | 7.67% |
| Eaton Vance Income Fund of Boston A | 7.44% |
Transamerica High Yield Bond (DVHYX) invests in preferred stocks and high yield debt securities. The majority of its assets are used to purchase junk bonds and related securities. The high yield mutual fund returned 22.28% over the last one year period and has a ten year annualized return of 7.09%.
Linda Carter is the fund manager and she has managed this high yield mutual fund since 2000.
John Hancock2 High Yield 1 (JIHDX) seeks above average 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%.
The high yield mutual fund has an expense ratio of 0.76% compared to a category average of 1.20%.
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 five year annualized return of 4.64%.
As of June 2010, this high yield mutual fund held 239 issues, with 5.65% of its total assets invested in ING Institutional Prime Money Market I.
Invesco High Yield A (AMHYX) seeks current income and capital growth. It invests at least 80% of its assets in debt securities rated below investment grade. Up to 25% of its assets may be used to purchase foreign securities and up to 15% may be invested in emerging market securities. The high yield mutual fund returned 23.5% in the last one year period.
Peter Ehret is the fund manager and he has managed this high yield mutual fund since 2001.
Eaton Vance Income Fund of Boston A (EVIBX) invests a large share of its assets in bonds issued for the purpose of highly leveraged transactions such as mergers and acquisitions. It may also invest in debt securities which generate income as well as derivatives such as futures and contracts. The high yield mutual fund has a three year annualized return of 6.3%.
The high yield mutual fund has a minimum initial investment of $1000 and an expense ratio of 1.11% 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/
