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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.
Loomis Sayles High Income A (NEFHX - MF report) seeks high current income and capital growth. In predominantly invests in securities rated below investment grade denominated in U.S dollars. Not more than one-fifth of its assets can be invested in non-dollar denominated foreign securities. This high yield mutual fund returned 21.53% over the last one year period.
Elaine M. Stokes is the fund manager and he has managed this high yield mutual fund since 2007.
Waddell & Reed High-Income A (UNHIX - MF report) seeks high total income by invests a majority of its assets in a variety of non investment grade fixed income instruments which carry a risk premium. This high yield mutual fund returned 19.94% over the last one year period.
As of September 2012, this high yield mutual fund held 244 issues, with 2.05% of its total assets invested in Cke Hldgs 144A 10.5%.
John Hancock Funds2 High Yield 1 (JIHDX - MF report) seeks high risk adjusted return over medium to long term by investing in high income fetching securities. The fund targets the intermediate end of the yield curve. This high yield mutual fund returned 18.16% over the last one year period.
The high yield mutual fund has an expense ratio of 0.76% compared to a category average of 1.12%.
MainStay High Yield Opportunities A (MYHAX - MF report) invests a majority of its assets in high yielding fixed income instruments that are rated below investment grade. These instruments are primarily issued by corporates. The high yield mutual fund returned 19.05% over the last one year period.
Dan Roberts is the fund manager and he has managed this high yield mutual fund since 2007.
Invesco High Yield A (AMHYX - MF report) seeks total return. The fund invests a majority of its assets in debt instruments rated below investment grade. The fund may also invest in securities issued outside the U.S. This high yield mutual fund returned 17.51% over the last one year period.
The high yield mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.90% 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.