Investing in high yield securities needs an above average appetite for risk as the probability of default is the highest 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.

Delaware Pooled High-Yield Bond ( DPHYX - MF report ) invests heavily in securities that generate high and stable income. It also focuses on corporate bonds rated “BB” or lower as per S&P investment grade and those securities that are backed by domestic government and related agencies. This high yield mutual fund returned 15.31% over the last one year period.

Thomas H. Chow is the fund manager and he has managed this high yield mutual fund since 2012.

Loomis Sayles High Income A ( NEFHX - MF report ) seeks high current income and capital growth. A minimum of 65% of its assets may be used to purchase securities rated below investment grade or dollar denominated foreign fixed-income securities. This high yield mutual fund returned 16.72% over the last one year period.

As of September 2012, this high yield mutual fund held 252 issues, with 3.54% of its total assets invested in Canada Govt 3%.

Waddell & Reed High-Income A ( UNHIX - MF report ) invests the majority of its assets in a wide range of fixed income securities that generates high yield and bear high risk. It invests significantly in junk bonds. This high yield mutual fund returned 16.57% over the last one year period.

The high yield mutual fund has an expense ratio of 1.08% compared to a category average of 1.13%.

John Hancock Funds II High Yield 1 ( JIHDX - MF report ) seeks high risk adjusted return over medium to long term period and invests heavily in high income securities. The fund may utilize its assets to purchase foreign securities or invest in fixed- and floating-rate loans. This high yield mutual fund returned 14.91% over the last one year period.

Stephen A. Walsh is the fund manager and he has managed this high yield mutual fund since 2006.

Guggenheim High Yield A ( SIHAX - MF report ) invests the majority of its assets in a wide range of debt securities with high risk and providing high returns. These securities should not be among the top four long-term rating categories as designated by a Nationally Recognized Statistical Rating Organization (NRSRO). The high yield mutual fund returned 14.45% over the last one year period.

The high yield mutual fund has a minimum initial investment of $100 and an expense ratio of 1.18% compared to a category average of 1.13%.

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.