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Buy These 3 High-Yield Bond Funds for Reducing Risk
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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. Though 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 headwinds faced in the early months of the pandemic, demand for high yield has recovered since the Fed’s rate cut and reopening of the economy. The improving economic activity renewed the search for yield, and given the current scenario, these bonds are poised to grow.
Manning & Napier High Yield Bond invests the majority of its net assets in investment-grade bonds, derivative instruments and exchange-traded funds. MNHYX also invests a portion of its net assets in bank loans, which are, generally, non-investment grade floating rate investments. The fund has returned 4.7% over the past three years.
As of June 2024, MNHYX had 19.7% of its assets invested in Total Misc Bonds.
Fidelity Series Floating Rate High Income invests mainly in floating rate loans, which are often lower-quality debt securities and other floating rate securities. FFHCX invests part of its assets in the money market, investment-grade debt securities and repurchase agreements. The fund has returned 7% over the past three years.
Chandler Perine has been one of the fund managers of FFHCX since September 2022.
American Funds American High-Income invests primarily in higher-yielding and lower-quality debt securities. AHIFX also invests part of its assets in securities of issuers domiciled outside the United States. The fund has returned 3.9% over the past three years.
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Buy These 3 High-Yield Bond Funds for Reducing Risk
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. Though 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 headwinds faced in the early months of the pandemic, demand for high yield has recovered since the Fed’s rate cut and reopening of the economy. The improving economic activity renewed the search for yield, and given the current scenario, these bonds are poised to grow.
Below, we share with you three top-ranked high-yield bond mutual funds, namely Manning & Napier High Yield Bond (MNHYX - Free Report) , Fidelity Series Floating Rate High Income (FFHCX - Free Report) and American Funds American High-Income (AHIFX - 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.
Manning & Napier High Yield Bond invests the majority of its net assets in investment-grade bonds, derivative instruments and exchange-traded funds. MNHYX also invests a portion of its net assets in bank loans, which are, generally, non-investment grade floating rate investments. The fund has returned 4.7% over the past three years.
As of June 2024, MNHYX had 19.7% of its assets invested in Total Misc Bonds.
Fidelity Series Floating Rate High Income invests mainly in floating rate loans, which are often lower-quality debt securities and other floating rate securities. FFHCX invests part of its assets in the money market, investment-grade debt securities and repurchase agreements. The fund has returned 7% over the past three years.
Chandler Perine has been one of the fund managers of FFHCX since September 2022.
American Funds American High-Income invests primarily in higher-yielding and lower-quality debt securities. AHIFX also invests part of its assets in securities of issuers domiciled outside the United States. The fund has returned 3.9% over the past three years.
AHIFX has an expense ratio of 0.43%.
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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