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Buy These 3 High-Yield Bond Funds for Great Returns
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High-yield bonds behave more like stocks than investment-grade bonds. These bonds have significant holdings in smaller companies, which are considered to have a weaker financial condition but benefit as the economy moves north. Though high-yield bonds are more exposed to credit risk, these have less exposure to interest rate risk, making them a differentiated source of return. Despite headwinds faced in the early months of the pandemic, demand for high yield has recovered since the Fed’s rate cut and reopening of the economy. The improving economic activity renewed the search for yield, and given the current scenario, these bonds are poised to grow.
BlackRock High Yield Bond Portfolio Investor A Shares seeks to maximize total return alongside income generation and prudent investment management. BHYAX invests most of its assets in non-investment grade bonds with maturities of ten years or less, and in convertible and preferred securities. The fund has returned 2.6% over the past three years.
As of December 2021, BHYAX has 71.5% of its assets invested in Total Misc Bonds.
Strategic Advisers Income Opportunities Fund invests mainly in income-generating debt securities, preferred stocks, and convertible securities, emphasizing lower-quality debt securities. FPIOX also invests a part of its assets in non-income producing securities, including defaulted securities and common stocks. The fund has returned 3.2% over the past three years.
Charles Sterling has been one of the fund managers of FPIOX since 2018.
American Funds American High-Income Trust invests primarily in higher-yielding and generally lower-quality debt securities. AHIFX also invests a part of its assets in securities of issuers domiciled outside the United States. The fund has returned 3.6% over the past three years.
AHIFX has an expense ratio of 0.40% compared with the category average of 0.95%.
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Buy These 3 High-Yield Bond Funds for Great Returns
High-yield bonds behave more like stocks than investment-grade bonds. These bonds have significant holdings in smaller companies, which are considered to have a weaker financial condition but benefit as the economy moves north. Though high-yield bonds are more exposed to credit risk, these have less exposure to interest rate risk, making them a differentiated source of return. Despite headwinds faced in the early months of the pandemic, demand for high yield has recovered since the Fed’s rate cut and reopening of the economy. The improving economic activity renewed the search for yield, and given the current scenario, these bonds are poised to grow.
Below we share with you three top-ranked high-yield bond mutual funds, namely BlackRock High Yield Bond Portfolio Investor A Shares (BHYAX - Free Report) , Strategic Advisers Income Opportunities Fund (FPIOX - Free Report) and American Funds American High-Income Trust (AHIFX - Free Report) . Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds.
BlackRock High Yield Bond Portfolio Investor A Shares seeks to maximize total return alongside income generation and prudent investment management. BHYAX invests most of its assets in non-investment grade bonds with maturities of ten years or less, and in convertible and preferred securities. The fund has returned 2.6% over the past three years.
As of December 2021, BHYAX has 71.5% of its assets invested in Total Misc Bonds.
Strategic Advisers Income Opportunities Fund invests mainly in income-generating debt securities, preferred stocks, and convertible securities, emphasizing lower-quality debt securities. FPIOX also invests a part of its assets in non-income producing securities, including defaulted securities and common stocks. The fund has returned 3.2% over the past three years.
Charles Sterling has been one of the fund managers of FPIOX since 2018.
American Funds American High-Income Trust invests primarily in higher-yielding and generally lower-quality debt securities. AHIFX also invests a part of its assets in securities of issuers domiciled outside the United States. The fund has returned 3.6% over the past three years.
AHIFX has an expense ratio of 0.40% compared with the category average of 0.95%.
To view the Zacks Rank and the past performance of all high-yield bond funds, investors can click here to see the complete list of high-yield bond funds.
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