Advertisement
Canada markets closed
  • S&P/TSX

    22,167.03
    +59.95 (+0.27%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • DOW

    39,807.37
    +47.29 (+0.12%)
     
  • CAD/USD

    0.7385
    -0.0001 (-0.02%)
     
  • CRUDE OIL

    83.11
    -0.06 (-0.07%)
     
  • Bitcoin CAD

    95,349.59
    -709.88 (-0.74%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • GOLD FUTURES

    2,254.80
    +16.40 (+0.73%)
     
  • RUSSELL 2000

    2,124.55
    +10.20 (+0.48%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • NASDAQ

    16,379.46
    -20.06 (-0.12%)
     
  • VOLATILITY

    13.01
    0.00 (0.00%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • NIKKEI 225

    40,369.44
    +201.37 (+0.50%)
     
  • CAD/EUR

    0.6836
    -0.0007 (-0.10%)
     

Bet on These 3 High-Yield Mutual Funds for Healthy Gains

This healthcare ETF hits a new 52-week high. Are more gains in store for this ETF?

Those looking to invest in bonds rated lower than investment-grade can consider high-yield bonds or junk bonds. Mutual funds having significant exposure in high-yield bonds are expected to provide better returns than those investing in securities with higher ratings, including government and corporate bonds. Also, due to their higher-yield feature, junk bonds are believed to be less susceptible to interest rate fluctuations.

Although bonds rated below investment grade are believed to be riskier than investment grade bonds, a well-diversified portfolio of these securities reduce the risk of a portfolio. Thus mutual funds maintaining a portfolio of these securities are the best for investors as these allocate their assets in such securities from a wide range of sectors.

Below we share with you three top-ranked high-yield bond mutual funds. 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 high-yield bond mutual funds.

Fidelity Series High Income FSHNX invests a large chunk of its assets in income-generating debt securities, convertible securities, and preferred stocks with more importance on high yield debt securities. The fund may also invest in non-income generating securities like common stocks and defaulted securities. Fidelity Series High Income has returned 5% in the last 12 months.

ADVERTISEMENT

Fred Hoff is the fund manager of FSHNX since 2011.

BlackRock High Yield Bond Portfolio Investor A Shares BHYAX seeks maximization of returns, consistent with a high level of income. BHYAX invests a bulk of its assets in high-yield bonds. The fund may invest a maximum of 30% of its assets in bonds of foreign issuers that are non-dollar denominated. The fund may also invest in convertible as well as preferred securities. BlackRock High Yield Bond Portfolio Investor A Shares has returned 3.2% over the past year.

BHYAX has an expense ratio of 0.94% compared with the category average of 1.00%.

American Funds American High-Income F2 AHIFX invests mainly in debt securities that are rated BB+ or lower, or Ba1 or lower by Nationally Recognized Statistical Rating Organizations. AHIFX seeks to offer high level of income. American Funds American High-Income F2 has returned 3.8% in the past year.

As of June 2018, AHIFX held 721 issues, with 1.22% of its total assets invested in Clear Channel Worldwide Holdings Inc. 7.62%.

To view the Zacks Rank and past performance of all high-yield bond mutual funds, can click here to see the complete list of high-yield bond mutual funds.

Want key mutual fund info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Get Your Free (BHYAX): Fund Analysis Report
 
Get Your Free (AHIFX): Fund Analysis Report
 
Get Your Free (FSHNX): Fund Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research