High yield bonds behave more like stocks than investment grade bonds. These bonds hold large stakes in smaller companies, which are considered to be in a weaker financial position, but which benefit 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 during the Fed’s tightening of monetary policy, with indications coming from the Fed that it may slow its breakneck pace of hikes, these bonds are poised to grow.
Below, we share with you three top-ranked high-yield bond mutual funds, namely Manning & Napier Fd, Inc. High Yield Bond Series MNHYX, Fidelity Advisor Floating Rate High Income Fund FFRAX and Fidelity Capital and Income Funds FAGIX. 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.
Manning & Napier Fd, Inc. High Yield Bond Series invests the majority of its assets in bonds rated below investment grade and other financial instruments, primarily derivatives and ETFs, with similar economic characteristics to lower-grade securities. MNHYX may invest part of its assets in bank loans. The fund has returned 3.1% over the past three years.
As of June 2022, MNHYX had 16.6% of its assets invested in Total Misc Bonds.
Fidelity Advisor Floating Rate High Income Fund seeks a high level of current income by investing the majority of its assets in loans and floating rate securities. FFRAX invests in companies whose financial situation is difficult or uncertain, using fundamental analysis of the financial situation and industry position of each issuer, as well as market and economic conditions. The fund has returned 2.4% over the past three years.
Eric Mollenhauer has been one of FFRAX’s fund managers since 2013.
Fidelity Capital and Income Funds invests in equities and debt securities, with an emphasis on lower quality debt securities and defaulted securities. FAGIX invests in companies whose financial situation is difficult or uncertain by using a fundamental analysis of the financial situation and the industry position of each issuer, as well as market and economic conditions to decide on its investments. The fund has returned 4.4% over the past three years.
FAGIX has an expense ratio of 0.67% against a category average of 0.95%.
To view the Zacks ranking and past performance of all high yield bond funds, investors can click here to view the full list of high yield bond funds.
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