Monday, February 22, 2016

Three High Yield Funds with Reduced Risk

concept of high yield funds
The popularity of high yield bonds are steadily increasing. Investors are in earnest search for an alternative to the stock market. The stock market tends to be quite unstable and unpredictable and usually proves to be more of a risk than a reward. Financiers are looking for a replacement that removes them from such a risk but still provides a better return than other forms of investments.

High yield funds have been the favored alternative amongst such investors and it shows. In 2015, 22 billion US dollars were invested in such funds. This is more than double the amount recorded the previous year. The allure of this type of financing is that its ‘risk’ factor actually results in a greater return rate than other asset classes. The best way to balance the gamble with the return is to invest in a fund that has a considerably lower risk than most. Here are a list of the best options:

Metropolitan West High Yield Bond Fund

This fund is more commonly known as MWHYX and has 2.3 billion US dollars in asset. It has also received a five-star rating from Morning star. 86 percent of this account consists of United States corporate bonds while the rest are overseas bonds. The annual portfolio turnover rate currently stands at 34 percent.

The MWHYX has a yield of 7.5 percent and has shown a steady increase over the past five years. In 2015, it showed an increase of 16.2 percent in a year.

Similar to other funds, MWHYX main investments lie with bonds that are rated BB and below. In an attempt at stability, the fund discerns the patterns across asset value, flow of money, and seniority to assess certain matters.

Janus High Yield Fund

Denoted as JAHYX, this 2 billion US dollar fund is a conservatively managed fund. It has received a four-star Morningstar rating. 88 percent of the account is comprised of United States corporate bonds while the remaining 11 percent consists of foreign bonds. The annual portfolio rate is typically estimated at 91 percent.

JAHYX has a yield of 7.06 percent. In the year of 2015, it held a total return of 4.1 percent. The previous year showed 18.4 percent. It has a 10-year annual return of 7.6 percent. The expenses of this firm are calculated at 0.86 percent. The least initial investment into the fund is US dollars 2,500.

The majority of the bonds in this fund are from firms that produce solid free cash flow. This leads to an enhancement in the value of the balance sheets and by default a stability in JAHYX credit quality profile. The conservative stance of the company ensures that its losses are smaller than its counterparts.

The Fidelity and Capital Income Fund

Abbreviated to FAGIX, this fund has assets of 11 billion US dollars. It has received a five-star rating from Morningstar. 81 percent of this fund consists of United States corporate funds while the rest is from overseas corporate bonds.

The yield of the fund was at 6.09 percent with a total return of 4.3 percent for the year of 2015. During the course of 2015, it accrued over 20 percent. The 10 year annual return of the fund is 10.2 percent.

Opportunistic in nature, FAGIX is saddled with greater risk than other funds. Its interests comprise of distressed securities and equities. Its investments lie with bonds with a rating of B. It also owns bank loans.

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