Top 5 Highest Yielding Corporate Bond Mutual Funds

In an uncertain environment, investors would do well to place their trust in bonds. However, selecting and purchasing bonds individually entails significant costs and effort on the part of the investor and this is where mutual funds come in. Funds investing in corporate bonds can offer high returns, though the associated risk also goes up. Low initial investment requirements and systematic research are some of the factors that make mutual funds a convenient route to invest in this category.

Below we will share with you the 5 highest yielding Zacks #1 ranked corporate bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. View the Zacks Rank and past performance of all mutual funds.

Mutual Fund	SEC Yield
Principal Preferred Securities	6.13%
Delaware Extended Duration Bond A	5.18%
Delaware Corporate Bond A	4.88%
T. Rowe Price Corporate Income	4.32%
Invesco Income A	4.05%

Principal Preferred Securities A (PPSAX) seeks current income. It invests the majority of its assets in preferred securities issued by U.S. companies which are rated investment grade or higher. If the security selected is unrated, then it must be of similar quality. The corporate bond mutual fund returned 23.16% in the last one year period.

The corporate bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.00% compared to a category average of 0.94%.

Delaware Extended Duration Bond A (DEEAX) invests the majority of its assets in corporate bonds rated investment grade or higher. Up to 20% of the fund’s assets may be used to purchase high-yield corporate bonds. The corporate bond mutual fund has a three year annualized return of 12.31%.

The Fund Manager is Thomas H. Chow and he has managed this corporate bond mutual fund since 2007.

Delaware Corporate Bond A (DGCAX) seeks total return. At least 80% of its assets are used to purchase investment grade corporate bonds. It may invest in convertible securities, warrants, common and preferred stock. Up to 20% of its assets may be used to purchase high yield corporate bonds. The corporate bond mutual fund has a five year annualized return of 8.27%.

As of June 2010, this corporate bond mutual fund held 266 issues, with 9.55% of its total assets invested in US LONG BOND (CBT) SEP10.

T. Rowe Price Corporate Income (PRPIX) invests at least 80% of its assets in corporate debt. Up to 10% of its assets may be utilized to purchase equity and convertible securities and not more than 5% invested in asset-backed securities. The corporate bond mutual fund has a ten year annualized return of 5.45%.

The corporate bond mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.62% compared to a category average of 0.88%.

Invesco Income A (AMIFX) seeks capital growth and current income. The fund invests heavily in U.S corporate bonds which are dollar denominated. Up to 40% of its assets may be used to purchase foreign securities. The corporate bond mutual fund returned 14.08% over the last one year period.

Peter Ehret is the fund manager and has managed this corporate bond mutual fund since 2006.

View the Zacks Rank and past performance of all mutual 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.

Read the full analyst report on PPSAX

Read the full analyst report on DEEAX

Read the full analyst report on DGCAX

Read the full analyst report on PRPIX

Read the full analyst report on AMIFX