Back to top

Best of Funds

For the average investor, high yield mutual funds are the best method to invest in bonds rated below investment grade, popularly known as junk bonds. This is because these funds hold a wide range of such securities, significantly reducing portfolio risk. In addition, these funds provide better returns than investments with higher ratings, including government and corporate bonds. Further, because the yield from such bonds is higher than investment grade securities, these investments are less susceptible to interest rate fluctuations.

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.

Western Asset Global High Yield Bond A (SAHYX - MF report) invests the majority of its assets in high yield bonds with relatively lower ratings. It may invest in both domestic and foreign securities and also in instruments backed by foreign governments. A maximum of 35% of its assets may be invested in sovereign debt instruments from emerging markets. This high yield mutual fund returned 18.83% over the last one year period.

S. C. Leech is the fund manager and he has managed this high yield mutual fund since 2006.

Delaware High-Yield Opportunities A (DHOAX - MF report) seeks total return. The fund invests in bonds providing high return with ratings equal to or below “BBB”. It may invest in both domestic and foreign securities issued by governments as well as in foreign corporate bonds. This high yield mutual fund returned 17.40% over the last one year period.

As of November 2012, this high yield mutual fund held 265 issues, with 1.00% of its total assets invested in Chrysler Grp Llc / Cg Co-Iss 8.25%.

Transamerica High Yield Bond A (IHIYX - MF report) invests heavily in bonds with high risk and providing high returns. The fund may also invest in cash, equivalent securities, money market securities or short term debt instruments. This high yield mutual fund returned 16.99% over the last one year period.

The high yield mutual fund has an expense ratio of 1.06% compared to a category average of 1.12%.

MassMutual Premier High Yield A (MPHAX - MF report) seeks high total return. It invests heavily in fixed income instruments with relatively lower ratings. A maximum of 20% of its assets may be invested in bank loans. This high yield mutual fund returned 16.32% over the last one year period.

Scott D. Roth is the fund manager and he has managed this high yield mutual fund since 2010.

Thrivent High Yield A (LBHYX - MF report) invests a large share of its assets in a wide range of high-yield debt securities. The securities must have ratings equal to or below “BB” as per S&P or ‘Ba” as per Moody’s. This high yield mutual fund returned 15.81% over the last one year period.

The high yield mutual fund has an expense ratio of 0.82% compared to a category average of 1.12%.

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.

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

If you wish to go to ZacksFunds.com, click OK. If you do not, click Cancel.

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%