High-yield bonds are more like stocks than investment-grade bonds. These bonds have significant holdings in small companies, which are said to have weak financial conditions but will benefit as the economy turns northward.
Although high-yield bonds are subject to credit risk, they are less exposed to interest rates, making them a different source of return. Despite signs that headwinds from the Fed’s tightening of monetary policy may slow, these bonds are poised to grow.
Below, we share with you three top-rated high-yield bond mutual funds. Trust Advisor High Income Benefit Fund – Part M FX, American Funds High Income Trust A AHITX and Buffalo High Yield Fund BUFHX has each earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to view the full list of funds.
Trust Advisor High Income Benefit Fund – Part M It seeks high income by investing the majority of its net assets in income-generating debt securities, preferred stocks and convertible securities, while focusing on low-quality debt securities and non-income-generating securities, including non-yielding ones. Securities and common shares. FAHYX Advisors chooses to invest in stocks based on fundamental analytical factors such as financial condition, industry position as well as market and economic conditions.
The Fidelity Advisor High Income Advantage Fund – Class M has a three-year annualized return of 4.1%. In the year As of the end of July 2022, FAHYX held 49.0% of its net assets in various bonds.
American Funds High Income Trust A Most of its assets, including corporate debt obligations, are invested in high-yielding and generally low-quality debt securities. AHITX Advisors invests a small portion of its assets in securities of foreign issuers.
American Funds High-Income Trust A has three-year annualized returns of 2.6 percent. AHITX has an expense ratio of 0.68% compared to the category average of 0.95%.
Buffalo High Yield Fund Most of its net assets are in highly rated, high-risk debt securities rated below investment grade by the major rating agencies, commonly known as “junk bonds”, typically with intermediate maturities. BUFHX Advisors may invest in investment-grade debt securities, US Treasury securities, money market funds and equity investments, including dividend stocks, volatile stocks and preferred stocks.
Buffalo High Yield Fund has annualized returns of 3.2 percent. Paul Dlugosch has been a BUFHX fund manager since July 2007.
To view the Zacks Rank and past performance of all high yield bond funds, investors can click here to view a list of high yield bond funds.
Want key mutual fund information delivered straight to your inbox?
The Zacks Free Fund Newsletter keeps you up-to-date on top news and analysis as well as top-performing mutual funds every week. Get it for free>>
See all Zacks #1 ranked mutual funds
Looking for the latest recommendations from Zacks Investment Research? Today, you can download 7 best stocks for the next 30 days. Click here to get this free report.
Get your free (BUFHX): Financial Analysis Report
Get your free (AHITX): Financial Analysis Report
Get your free (FAHYX): Financial Analysis Report
Click here to read this article on Zacks.com.
Zacks Investment Research