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5 Best-Rated High Yield Bond Mutual Funds to Invest In

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For the average investor, high yield bond 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 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. To view the Zacks Rank and past performance of all high yield bond funds, investors can click here to see the complete list of funds.

Franklin High Income A (FHAIX - Free Report) invests mostly in lower-rated debt securities that provide high yield. These lower-rated securities include bonds, debentures, convertible securities and other debt securities. The fund seeks high level of current income. This high yield mutual fund has a three-year annualized return of 6.5%.

The high yield mutual fund has an expense ratio of 0.76% compared to a category average of 1.06%.

MassMutual Premier High Yield A (MPHAX - Free Report) seeks high total return by investing in high yielding securities. The fund invests a major portion of its assets in below grade domestic debt instruments which also include default securities. This high yield mutual fund has a three-year annualized return of 8.4%.

As of December 2014, this high yield mutual fund held 125 issues, with 2.81% of its total assets invested in Mustang Merger 144A 8.5%

JHancock Focused High Yield A (JHHBX - Free Report) invests a large portion of its assets in domestic and foreign debt securities rated BB/Ba or lower. These fixed-income securities include U.S. and non-U.S. corporate bonds, debentures, convertible securities, preferred securities and foreign government obligations. The fund may invest a maximum 20% of its assets in companies of any one industry. This high yield mutual fund has a three-year annualized return of 8.7%.

The high yield mutual fund has an expense ratio of 0.97% compared to a category average of 1.06%.

Northern High Yield Fixed Income (NHFIX - Free Report) seeks high current income. It invests a majority of its assets in lower rated bonds, commonly known as "junk bonds". The fund may also invest a share of its assets in high quality securities. Even though the fund focuses on acquiring domestic securities, it may invest in foreign securities to a lesser extent. This high yield mutual fund has a three-year annualized return of 7%.

Richard J. Inzunza is the fund manager and he has managed this high yield mutual fund since 2007.

RidgeWorth High Income A (SAHIX - Free Report) invests heavily in lower rated debt securities that are expected to provide high yield. These securities include corporate obligations, floating rate loans and other debt obligations. The fund invests a minimum of 65% and may invest all of its assets in below grade investment securities. This high yield mutual fund has a three-year annualized return of 6.9%.

The high yield mutual fund has an expense ratio of 0.97% compared to a category average of 1.06%.

To view the Zacks Rank and past performance of all high yield bond 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 www.zacks.com/funds/mutual-funds.



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