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3 Top-Rated High-Yield Bond Funds for Steady Returns
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High-yield bonds behave more like stocks than investment-grade bonds. These bonds have significant holdings in smaller companies, which are considered to have a weaker financial condition but benefit as the economy moves north.
Although high-yield bonds are more exposed to credit risk, these have less exposure to interest rate risk, making them a differentiated source of return. Despite the headwinds faced during the Fed’s tightening of monetary policy, with indications coming in from the Fed that it might slow down its steep rate of hikes, these bonds are poised to grow.
T. Rowe Price Floating Rate Fund invests its assets along with borrowing, if any, in floating rate loans and floating rate debt securities wherein floating rate loans represent amounts borrowed by companies or other entities from banks and other lenders. PAFRX advisors invest mostly in funds that are below investment grade or junk or unrated securities.
T. Rowe Price Floating Rate Fund has three-year annualized returns of 2.8%. As of the end of November 2022, PAFRX held 52.56% of its net assets in miscellaneous bonds.
American Funds American High-Income Trust invests most of its assets in high-yielding and low-quality debt securities of domestic and foreign issuers, which are rated Ba1/BB+ or below by nationally recognized rating organizations or other issues of equivalent quality based on the fund manager’s judgment. AHITX advisors also invest in corporate loan obligations.
American Funds American High-Income Trust has three-year annualized returns of 2.7%. AHITX has an expense ratio of 0.68% compared with the category average of 0.95%.
Eaton Vance High Income Opportunities Fund invests most of its assets along with borrowings, if any, in fixed-income securities, preferred securities and other hybrid securities, such as senior floating rate loans, secured and unsecured subordinated floating rate loans and convertible securities. ETHIX advisors prefer to invest in high-yield, high-risk corporate bonds, and in bonds issued in connection with mergers, acquisitions, and other highly-leveraged transactions.
Eaton Vance High Income Opportunities Fund has three-year annualized returns of 2.8%. Kelley Baccei Gerrity has been one of the fund managers of ETHIX since November 2014.
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3 Top-Rated High-Yield Bond Funds for Steady Returns
High-yield bonds behave more like stocks than investment-grade bonds. These bonds have significant holdings in smaller companies, which are considered to have a weaker financial condition but benefit as the economy moves north.
Although high-yield bonds are more exposed to credit risk, these have less exposure to interest rate risk, making them a differentiated source of return. Despite the headwinds faced during the Fed’s tightening of monetary policy, with indications coming in from the Fed that it might slow down its steep rate of hikes, these bonds are poised to grow.
Below, we share with you three top-ranked high-yield bond mutual funds, namely T. Rowe Price Floating Rate Fund (PAFRX - Free Report) , American Funds American High-Income Trust (AHITX - Free Report) and Eaton Vance High Income Opportunities Fund (ETHIX - Free Report) . Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds.
T. Rowe Price Floating Rate Fund invests its assets along with borrowing, if any, in floating rate loans and floating rate debt securities wherein floating rate loans represent amounts borrowed by companies or other entities from banks and other lenders. PAFRX advisors invest mostly in funds that are below investment grade or junk or unrated securities.
T. Rowe Price Floating Rate Fund has three-year annualized returns of 2.8%. As of the end of November 2022, PAFRX held 52.56% of its net assets in miscellaneous bonds.
American Funds American High-Income Trust invests most of its assets in high-yielding and low-quality debt securities of domestic and foreign issuers, which are rated Ba1/BB+ or below by nationally recognized rating organizations or other issues of equivalent quality based on the fund manager’s judgment. AHITX advisors also invest in corporate loan obligations.
American Funds American High-Income Trust has three-year annualized returns of 2.7%. AHITX has an expense ratio of 0.68% compared with the category average of 0.95%.
Eaton Vance High Income Opportunities Fund invests most of its assets along with borrowings, if any, in fixed-income securities, preferred securities and other hybrid securities, such as senior floating rate loans, secured and unsecured subordinated floating rate loans and convertible securities. ETHIX advisors prefer to invest in high-yield, high-risk corporate bonds, and in bonds issued in connection with mergers, acquisitions, and other highly-leveraged transactions.
Eaton Vance High Income Opportunities Fund has three-year annualized returns of 2.8%. Kelley Baccei Gerrity has been one of the fund managers of ETHIX since November 2014.
To view the Zacks Rank and the past performance of all high-yield bond funds, investors can click here to see the complete list of high-yield bond funds.
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