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.
Although 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 the headwinds faced during the Fed’s tightening of monetary policy, with indications coming in from the Fed that it might slow down its steep rate of hikes, these bonds are poised to grow.
Below, we share with you three top-ranked high-yield bond mutual funds, namely Fidelity Series Floating Rate High Income Fund FFHCX, Neuberger Berman Floating Rate Income Fund NFIAX and American Beacon SiM High Yld Opps Fund SHOAX. 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.
Fidelity Series Floating Rate High Income Fund invests most of its net assets in floating rate loans, lower-quality debt securities, also referred to as high-yield debt securities, companies in distress or uncertain financial condition, money market, investment-grade debt securities, and repurchase agreements. FFHCX advisors invest in both foreign and domestic issues.
Fidelity Series Floating Rate High Income Fund has three-year annualized returns of 6.5%. As of the end of September 2023, FFHCX held 64.6% of its net assets in miscellaneous bonds.
Neuberger Berman Floating Rate Income Fund invests most of its net assets in floating-rate securities, loans and other investments in companies that provide investment exposure to such floating-rate securities. NFIAX chooses to invest in floating-rate, senior-secured loans and below-investment-grade securities issued in U.S. dollars by U.S. and foreign issuers.
Neuberger Berman Floating Rate Income Fund has three-year annualized returns of 4.6%. NFIAX has an expense ratio of 0.98% compared with the category average of 1.03%.
American Beacon SiM High Yld Opps Fund invests most of its assets, along with borrowings, if any, in domestic and foreign (including emerging market) issues of non-investment grade securities and financial instruments that provide exposure to non-investment grade securities. SHOAX advisors can invest in debt securities with varying maturity periods and ratings.
American Beacon SiM High Yld Opps Fund has three-year annualized returns of 4.1%. Gary J. Pokrzywinski has been the fund manager of SHOAX since February 2011.
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.
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 >>
*Top 5 ChatGPT Stocks Revealed
*Zacks Senior Stock Strategist, Kevin Cook names 5 hand-picked stocks with sky-high growth potential in a brilliant sector of Artificial Intelligence. By 2030, the AI industry is predicted to have an internet and iPhone-scale economic impact of $15.7 Trillion.
*Today you can invest in the wave of the future, an automation that answers follow-up questions … admits mistakes … challenges incorrect premises … rejects inappropriate requests. As one of the selected companies puts it, "Automation frees people from the mundane so they can accomplish the miraculous."
Download Free ChatGPT Stock Report Right Now >>