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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 the 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-rated high yield bond mutual funds. Each has earned either a Zacks Mutual Fund Rank #1 (Strong Buy) or a Zacks Mutual Fund Rank #2 (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 . Lord Abbett Bond Debenture Fund A (MUTF: LBNDX ) invests a large chunk of its assets in fixed-income securities, including bonds and debentures. LBNDX may invest a significant share of its assets in junk bonds that are believed to provide a high return. It invests in high-yield securities that are ranked below BB/Ba. The Lord Abbett Bond-Debenture Fund A has a three-year annualized return of 7.2%. LBNDX has an expense ratio of 0.86%, compared to a category average of 1.07%. Wells Fargo Advantage Short-Term High Yield Bond Fund Investor (MUTF: STHBX ) seeks total return through high current income and capital growth. It invests a major portion of its assets corporate debt securities that are rated below investment-grade. STHBX may also invest a maximum of one-fourth of its assets in non-US securities that are denominated in the US dollar. The fund invests in securities that include corporate bonds and bank loans having fixed, floating or variable rates. The Wells Fargo Advantage Short-Term High-Yield Bond Investor fund has a three-year annualized return of 3.1%. As of May 2015, STHBX held 165 issues, with 1.47% of its total assets invested in Cit Grp 4.25%. Fidelity Advisor High Income Fund A (MUTF: FHIAX ) invests in income-generating securities, including debt securities, preferred stocks and convertible securities, with a primary focus on below-investment grade securities. It may also invest in defaulted securities and common stocks. In addition, FHIAX invests in firms that are going through a tough time. Factors such as financial strength and economic condition are considered before investing in a security throughout the globe. Matthew Conti is the fund manager, and he has managed FHIAX since 2001. Transamerica Partners High Yield Bond Fund Inv (MUTF: DVHYX ) seeks high current income. It mainly invests in underlying funds. DVHYX invests majority of its assets in bonds that are expected to provide a high return. The fund has a three-year annualized return of 6.2%. DVHYX has an expense ratio of 0.58%, compared to a category average of 1.07%. City National Rochdale High-Yield Bond Fund Servicing (MUTF: CHYIX ) invests a lion’s share of its assets in below-investment grade securities that are believed to produce fixed income, commonly known as “junk bonds.” The fund invests in securities, including corporate bonds and debentures, convertible securities, preferred securities and debt securities. CHYIX invests in securities that are issued by both US and non-US entities. As of March 2015, CHYIX held 179 issues, with 2.04% of its total assets invested in Central Garden & Pet 8.25%. Original Post Scalper1 News
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