Top 3 High Yield Bonds to Add to Your Portfolio Now
Hhigh-yield bonds behave more like stocks than investment-grade bonds. These bonds hold large stakes in smaller companies, which are in a weaker financial position but are benefiting from the shift in the economy to the north. Although high yield bonds are more exposed to credit risk, they are less exposed to interest rate risk, making them a differentiated source of return. Despite the headwinds encountered in the early months of the pandemic, demand for high yield has recovered since the Fed cut rates and the economy reopened. Improving economic activity has 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 Strategic Advisors Fidelity International Fund FUSIX, Manning & Napier High Yield Bond Series MNHYX and American High-Income Trust Class A Funds AHITX. Each earned a Zacks Mutual Fund Ranking #1 (Strong Buy) and are expected to outperform their peers going forward. Investors can click here to view the full list of funds.
Strategic Advisors Fidelity International Fund invests the majority of its net assets in common stocks of companies located in foreign countries, particularly in emerging markets. FUSIX invests indirectly in securities through one or more other funds.
Strategic Advisers Fidelity International Fund has three-year annualized returns of 8.1%. At the end of February 2022, FUSIX had 70.70% of its assets invested in Other investments.
Manning & Napier High Yield Bond Series invests the majority of its net assets in investment grade bonds, derivatives, and exchange-traded funds (ETFs), U.S. dollar-denominated fixed-income securities issued by U.S. and foreign corporations and governments, including those in emerging markets. MNHYX also invests a portion of its net assets in bank loans, which are generally lower quality floating rate investments.
Manning & Napier High Yield Bond Series has three-year annualized returns of 5.7%. MNHYX boasts an expense ratio of 0.90% against a category average of 0.95%.
American High-Income Trust Class A Funds seeks current income as well as capital appreciation by investing in higher yielding, lower quality debt securities (rated Ba1/BB+ or lower by nationally recognized statistical rating organizations. AHITX may also invest a part of its net assets in securities of foreign issuers.
US Funds US High Income Trust Class A posted three-year annualized returns of 4.0%. David A. Daigle has been AHITX’s fund manager since December 2003.
To view the Zacks ranking and past performance of all high yield bond funds, investors can click here to see the full list of high yield bond funds.
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