For an average investor, high-yield bond mutual funds are the best 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 that reduce portfolio risk. In addition, these funds provide better returns than investments with higher ratings, including government and corporate bonds. Further, since the yield from such bonds is higher than investment-grade securities, they are less susceptible to interest rate fluctuations.
Below, we share with you three top-ranked high-yield bond mutual funds, namely Virtus Seix Floating Rate High Income Fund SFRAX, Credit Suisse Floating Rate High Income CHICX and Buffalo High Yield Fund BUFHX. 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.
Virtus Seix Floating Rate High Income Fund invests most of its assets, along with borrowings, if any, in a portfolio of first- and second-lien senior floating-rate loans and other floating-rate debt instruments. SFRAX advisors also invest a small portion of its net assets in senior loans made to non-U.S. borrowers.
Virtus Seix Floating Rate High Income Fund has three-year annualized returns of 6.2%. As of the end of September 2024, SFRAX held 60.7% of its net assets in miscellaneous bonds.
Credit Suisse Floating Rate High 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. CHICX 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.
Credit Suisse Floating Rate High Income fund has three-year annualized returns of 5.6%. CHICX has an expense ratio of 1.7%.
Buffalo High Yield Fund invests most of its assets in higher-yielding, higher-risk debt securities rated below investment grade by the major rating agencies, preferably with intermediate-term maturities. BUFHX advisors also invest a small portion of their net assets in investment-grade debt securities, U.S. Treasury Securities, money market funds and equity investments, including dividend-paying stocks, convertible stocks and preferred stocks.
Buffalo High Yield Fund has three-year annualized returns of 5.8%. Jeffrey K. Deardorff has been the fund manager of BUFHX since January 2015.
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 >>
Only $1 to See All Zacks' Buys and Sells
We're not kidding.
Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.
Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.
See Stocks Now >>View All Zacks #1 Ranked Mutual Funds
Get Your Free (SFRAX): Fund Analysis Report
Get Your Free (CHICX): Fund Analysis Report
Get Your Free (BUFHX): Fund Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
