Back to top

Mutual Fund Commentary

Investing in high yield securities needs an above average appetite for risk as the probability of default is maximum in these securities. These lower rated securities carry high coupon yields to compensate investors for the associated risk. However, they can maximize total returns by generating high interest income and capital appreciation over the long term. Mutual funds investing in these securities significantly reduce the associated risk through diversification and should be a part of the portfolio of every investor looking at maximum returns.

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, investors can click here to see the complete list of funds.

Rydex High Yield Strategy A (RYHDX - MF report) seeks to provide returns that mimic the performance of the high yield bond market. The fund predominantly invests in high yield bonds similar to those in the U.S and Canadian high yield bond market. The high yield mutual fund has a three year annualized return of 14.73%.

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 1.15%.

Columbia High Yield Opportunity A seeks total returns. A majority of its assets are invested in high yield debt securities issued by domestic and foreign companies including companies from emerging markets. The high yield mutual fund has a three year annualized return of 19.2%%. 

Brian Lavin is the fund manager and he has managed this high yield mutual fund since 2010.

Touchstone High Yield Bond A (THYAX - MF report) seeks a high level of regular income. The fund invests a large share of its assets in below investment grade debt securities, issued by domestic companies. The high yield mutual fund has a three year annualized return of 20.4%.

The high yield mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.05% compared to a category average of 1.15%.

ING High Yield Bond A (IHYAX - MF report) invests the majority of its assets in below investment grade “junk” bonds issued from domestic as well as foreign economies including emerging markets. The fund may lend a maximum of 33% of its assets on a short or long term basis in order to increase returns. The high yield mutual fund has a three year annualized return of 19.32%.

As of December 2011, this high yield mutual fund held 319 issues, with 10.41% of its total assets invested in BlackRock Liquidity Temp Fund Institutional.
 

Thrivent High Yield Fund A (LBHYX - MF report) seeks current income. The fund invests heavily in a wide range of high-yield debt securities with ratings equal to or below “BB” as per S&P or ‘Ba” as per Moody’s. The high yield mutual fund has a three year annualized return of 18.06%.

Paul Ocenasek is the fund manager and he has managed this high yield mutual fund since 1997.

To view the Zacks Rank and past performance of all high yield mutual funds, investors can click here to see the complete list of 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 at http://www.zacks.com/funds.

Please login to Zacks.com or register to post a comment.