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5 Zacks #1 Rank High-Yield Bond Mutual Funds

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For the average investor, high yield bond mutual funds are a great 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 buy-ranked 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 mutual funds, investors can click here to see the complete list of funds.

Lord Abbett High Yield A (LHYAX - Free Report) invests a lion’s share of its assets in below investment grade debt instruments including corporate debt and convertible securities. LHYAX may invest not more than 20% of its assets in non-dollar denominated foreign securities. LHYAX may also invest a maximum one-fifth of its assets in municipal securities. The Lord Abbett High Yield A fund has a three-year annualized return of 6.1%.

LHYAX has an expense ratio of 0.94% compared to a category average of 1.06%.

City National Rochdale High-Yield Bond Servicing (CHYIX - Free Report) seeks total return. CHYIX invests a major portion of its assets in below investment grade securities that are believed to produce fixed income, commonly known as “junk bonds.” CHYIX invests in securities including corporate bonds and debentures, convertible securities, preferred securities and debt securities. CHYIX invests in securities that are issued by both the US and non-US entities. The City National Rochdale High-Yield Bond Servicing fund has a three-year annualized return of 4.3%.

As of June 2015, CHYIX held 192 issues, with 2.02% of its total assets invested in Central Garden & Pet 8.25%.

Dreyfus High Yield A (DPLTX - Free Report) invests a large chunk of its assets in fixed income securities. DPLTX is expected to provide maximum total return by investing in securities that are rated below investment grade by The Dreyfus Corporation. The Dreyfus High Yield A fund has a three-year annualized return of 4.2%.

DPLTX has an expense ratio of 0.95% compared to a category average of 1.06%.

Fidelity Advisor High Income A seeks high level of current income. FHIAX invests in income generating securities including debt securities, preferred stocks and convertible securities, with a primary focus on below investment-grade securities. FHIAX may also invest in defaulted securities and common stocks. FHIAX also invests in firms that are going through a tough time. The Fidelity Advisor High Income A fund has a three-year annualized return of 3.6%.

Matthew Conti is the fund manager and he has managed FHIAX since 2001.

Transamerica High Yield Bond A (IHIYX - Free Report) invests a large portion of its assets in high-yield bonds that are also expected to have high level of risk associated with them. Though, IHIYX primarily invests in debt instruments that are issued in the U.S., it may also allocate a significant portion of its assets in non-U.S. debt securities. The Transamerica High Yield Bond A fund has a three-year annualized return of 4.3%.

IHIYX 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. Pick the best mutual funds with the Zacks Rank.



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