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3 High-Yield Bond Funds to Buy for Impressive Returns
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High-yield bonds are debt securities issued by corporations that can provide a higher yield than investment-grade bonds but are riskier investments. These corporate bonds represent debt issued by a firm with the promise to pay interest and return the principal on maturity. Junk bonds are issued by companies with poorer credit quality.
They carry lower credit ratings from the leading credit agencies, usually Ba1 or lower by Moody's, or BB+ or lower by Standard & Poor's or Fitch. These bonds have significant holdings in smaller companies, which 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 lucrative source of returns.
Fidelity Series Floating Rate Hi Inc. Fund invests mainly in floating-rate loans, which are often lower-quality debt securities and other floating-rate securities. FFHCX invests part of its assets in the money market, investment-grade debt securities and repurchase agreements.
Fidelity Series Floating Rate Hi Inc. has three-year annualized returns of 6.8%. FFHCX has an expense ratio of 0.03% compared with the category average of 1.03%.
American Funds American High-Income Trust Fund seeks a high level of current income by investing in high-yield, high-risk bonds and other similar securities, including preferred stocks. AHITX also invests in common stocks or equity-related securities.
American Funds American High-Income Trust Fund has three-year annualized returns of 3.2%. Tara L. Torrens has been one of the fund managers of AHITX since May 2015.
Payden High Income Fund seeks high current income while providing capital appreciation by investing primarily in a diversified portfolio of below-investment-grade bonds. PYHRX also invests in a diversified portfolio of higher-yielding corporate bonds.
Payden High Income Fund has three-year annualized returns of 3.1%. As of the end of April 2023, PYHRX held 1% of its net assets in Baytex Energy Corp.
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3 High-Yield Bond Funds to Buy for Impressive Returns
High-yield bonds are debt securities issued by corporations that can provide a higher yield than investment-grade bonds but are riskier investments. These corporate bonds represent debt issued by a firm with the promise to pay interest and return the principal on maturity. Junk bonds are issued by companies with poorer credit quality.
They carry lower credit ratings from the leading credit agencies, usually Ba1 or lower by Moody's, or BB+ or lower by Standard & Poor's or Fitch. These bonds have significant holdings in smaller companies, which 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 lucrative source of returns.
Below, we share with you three top-ranked high-yield bond mutual funds, viz., Fidelity Series Floating Rate Hi Inc. Fund (FFHCX - Free Report) , American Funds American High-Income Trust Fund (AHITX - Free Report) and Payden High Income Fund (PYHRX - 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.
Fidelity Series Floating Rate Hi Inc. Fund invests mainly in floating-rate loans, which are often lower-quality debt securities and other floating-rate securities. FFHCX invests part of its assets in the money market, investment-grade debt securities and repurchase agreements.
Fidelity Series Floating Rate Hi Inc. has three-year annualized returns of 6.8%. FFHCX has an expense ratio of 0.03% compared with the category average of 1.03%.
American Funds American High-Income Trust Fund seeks a high level of current income by investing in high-yield, high-risk bonds and other similar securities, including preferred stocks. AHITX also invests in common stocks or equity-related securities.
American Funds American High-Income Trust Fund has three-year annualized returns of 3.2%. Tara L. Torrens has been one of the fund managers of AHITX since May 2015.
Payden High Income Fund seeks high current income while providing capital appreciation by investing primarily in a diversified portfolio of below-investment-grade bonds. PYHRX also invests in a diversified portfolio of higher-yielding corporate bonds.
Payden High Income Fund has three-year annualized returns of 3.1%. As of the end of April 2023, PYHRX held 1% of its net assets in Baytex Energy Corp.
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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