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Trending: Top Three High Yield Bond Funds

A man examines the inscription Bonds
MutualFunds.com analyzes the search patterns of our visitors every two weeks to find the top trending funds. By sharing these trends with our readers, we hope to provide insights into what the financial world is concerned about and how to position your portfolio.

First, we select the top trending category from more than 200 categories listed on MutualFunds.com based on the percentage increase in monthly viewership. From the top trending category, we select the top three funds with the highest one-year trailing total returns. To ensure the quality and staying power of funds, we only look at mutual funds with a minimum of $250 million in assets and a track record of at least one year. We also remove mutual funds that are closed to new investors and not available for investment outside registered accounts, such as retirement or 529 accounts.

In this week’s edition, we analyze the top three High Yield Bond Funds. These funds invest in bonds rated below investment grade where investors can realize higher yields in exchange for a higher risk of default or other adverse credit events.

High yield bonds had become extremely popular over the past decade amid a persistent low interest rate environment. With inflation expectations on the rise in recent months, high yield bonds could become less attractive as investors have other alternatives, although many issuers have strong fundamentals that could help reduce risk and boost risk-adjusted returns.

Our breakdown of each fund includes key aspects, such as one-year performance, fund expenses, investment style, and management teams, to give you an overview of how these funds hold up against their peers.

Be sure to check out the High Yield Bond Funds page to find out more about other funds in this category as well.

Trending Funds

The top three funds in this category are broken down below.

1. Fidelity Advisor® High Income Advantage Fund (FAHDX)

The top fund in our list this week is the Fidelity Advisor High Income Advantage Fund (FAHDX). It generated a solid 35.23% trailing one-year total return with a 1% expense ratio and a 3.3% yield, making it the highest performing but lowest yielding fund on the list.

The fund’s strategy involves the use of fundamental analysis to invest in a portfolio of income-producing debt securities, preferred stocks, and convertible securities, with an emphasis on lower-quality debt securities. Despite its focus on income, the fund also invests in non-income-producing securities, including defaulted fixed income securities and common stock, and holds up to 20% of its total assets in common stock.

The fund is co-managed by Mark Notkin, Vice President and Co-Manager of Fidelity Investments, and Brian Chang, a Portfolio Manager in the High-Income division at Fidelity Investments. Both managers have a 1.5-year tenure, which is much lower than the category average of about 6.6 years and the category high of 36.6 years.

The fund’s portfolio consists of more than 500 securities, including 71.8% bonds, 20.2% common stock, 6.1% cash, 1.6% preferred stock, and 0.4% convertible bonds. In terms of sectors, the fund is concentrated in consumer cyclical (22.4%), technology (19.5%), communication services (11.8%), and energy (10.5%).

FAHDX Barchart Interactive Chart 04 27 2021
 

Source: Barchart.com

Learn more about different portfolio management concepts here.

2. Pioneer Global High Yield Advantage Fund (PGHYX)

The number two fund on our list this week is the Pioneer Global High Yield Advantage Fund (PGHYX). The fund delivered a solid 30.3% one-year total return with a 1.23% expense ratio and a 5.23% yield, making it the highest cost fund on the list.

The fund’s strategy is to invest at least 80% of its assets in below investment grade debt securities and preferred stock in the U.S. and abroad, including emerging markets, which sets it apart from the other funds on the list.

The fund is co-managed by Andrew Feltus, CFA, Managing Director and Co-Manager of High Yield Investments, Kenneth Monaghan, Managing Director and Co-Manager of High Yield Investments, and Matthew Shulkin, CFA, VP Portfolio Manager. While Mr. Feltus has been with the fund for nearly 20 years, the other two managers have a tenure of just 3.5 years and 1.5 years, respectively.

The fund’s portfolio consists of 368 securities, including 97.4% bonds, 4.2% convertible bonds, and other investments. While the fund is concentrated in the energy sector at 94% of its holdings, approximately 43% of its holdings are located outside of the U.S., which translates to a significant amount of geographic diversification.

PGHYX Barchart Interactive Chart 04 27 2021
 

Source: Barchart.com

Find out about the funds suitable for your portfolio by using our free screener.

3. Artisan High Income Investor Fund (ARTFX)

The third place on the list belongs to the Artisan High Income Investor Fund (ARTFX). The fund generated a robust 26.47% trailing one-year return with a 0.96% expense ratio and a 5.66% yield, making it the lowest cost and highest yielding fund on the list.

The fund’s strategy is to invest in corporate bonds, loans, and other securities of leveraged corporate issuers to take advantage of the illiquidity premium and the asymmetric risk profile in credit investments.

The fund is managed by Bryan Krug, CFA, Managing Director of Artisan Partners and Portfolio Manager on the credit team, who has been managing the fund for about seven years.

The fund holds just over 200 securities in its portfolio, including 85% bonds and 13% cash. Nearly all of these holdings are in the U.S. energy sector with a 98.4% weighting in energy and an 81% weighting in the U.S., making it the least diversified fund on the list.

ARTFX Barchart Interactive Chart 04 27 2021
 

Source: Barchart.com

Want to learn more about portfolio rebalancing? Click here.

The Bottom Line

High yield bonds have been a popular asset class over the past decade amid record low interest rates. With the recent rise in inflation, these bonds could become less attractive for many investors, although the fundamentals for many issuers have improved in the wake of government support for businesses during the COVID-19 pandemic.

Make sure to visit our News section to catch up with the latest news about mutual fund performance.

Note: Trailing one-year total returns (daily) as of April 21, 2021.


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A man examines the inscription Bonds

Trending: Top Three High Yield Bond Funds

MutualFunds.com analyzes the search patterns of our visitors every two weeks to find the top trending funds. By sharing these trends with our readers, we hope to provide insights into what the financial world is concerned about and how to position your portfolio.

First, we select the top trending category from more than 200 categories listed on MutualFunds.com based on the percentage increase in monthly viewership. From the top trending category, we select the top three funds with the highest one-year trailing total returns. To ensure the quality and staying power of funds, we only look at mutual funds with a minimum of $250 million in assets and a track record of at least one year. We also remove mutual funds that are closed to new investors and not available for investment outside registered accounts, such as retirement or 529 accounts.

In this week’s edition, we analyze the top three High Yield Bond Funds. These funds invest in bonds rated below investment grade where investors can realize higher yields in exchange for a higher risk of default or other adverse credit events.

High yield bonds had become extremely popular over the past decade amid a persistent low interest rate environment. With inflation expectations on the rise in recent months, high yield bonds could become less attractive as investors have other alternatives, although many issuers have strong fundamentals that could help reduce risk and boost risk-adjusted returns.

Our breakdown of each fund includes key aspects, such as one-year performance, fund expenses, investment style, and management teams, to give you an overview of how these funds hold up against their peers.

Be sure to check out the High Yield Bond Funds page to find out more about other funds in this category as well.

Trending Funds

The top three funds in this category are broken down below.

1. Fidelity Advisor® High Income Advantage Fund (FAHDX)

The top fund in our list this week is the Fidelity Advisor High Income Advantage Fund (FAHDX). It generated a solid 35.23% trailing one-year total return with a 1% expense ratio and a 3.3% yield, making it the highest performing but lowest yielding fund on the list.

The fund’s strategy involves the use of fundamental analysis to invest in a portfolio of income-producing debt securities, preferred stocks, and convertible securities, with an emphasis on lower-quality debt securities. Despite its focus on income, the fund also invests in non-income-producing securities, including defaulted fixed income securities and common stock, and holds up to 20% of its total assets in common stock.

The fund is co-managed by Mark Notkin, Vice President and Co-Manager of Fidelity Investments, and Brian Chang, a Portfolio Manager in the High-Income division at Fidelity Investments. Both managers have a 1.5-year tenure, which is much lower than the category average of about 6.6 years and the category high of 36.6 years.

The fund’s portfolio consists of more than 500 securities, including 71.8% bonds, 20.2% common stock, 6.1% cash, 1.6% preferred stock, and 0.4% convertible bonds. In terms of sectors, the fund is concentrated in consumer cyclical (22.4%), technology (19.5%), communication services (11.8%), and energy (10.5%).

FAHDX Barchart Interactive Chart 04 27 2021
 

Source: Barchart.com

Learn more about different portfolio management concepts here.

2. Pioneer Global High Yield Advantage Fund (PGHYX)

The number two fund on our list this week is the Pioneer Global High Yield Advantage Fund (PGHYX). The fund delivered a solid 30.3% one-year total return with a 1.23% expense ratio and a 5.23% yield, making it the highest cost fund on the list.

The fund’s strategy is to invest at least 80% of its assets in below investment grade debt securities and preferred stock in the U.S. and abroad, including emerging markets, which sets it apart from the other funds on the list.

The fund is co-managed by Andrew Feltus, CFA, Managing Director and Co-Manager of High Yield Investments, Kenneth Monaghan, Managing Director and Co-Manager of High Yield Investments, and Matthew Shulkin, CFA, VP Portfolio Manager. While Mr. Feltus has been with the fund for nearly 20 years, the other two managers have a tenure of just 3.5 years and 1.5 years, respectively.

The fund’s portfolio consists of 368 securities, including 97.4% bonds, 4.2% convertible bonds, and other investments. While the fund is concentrated in the energy sector at 94% of its holdings, approximately 43% of its holdings are located outside of the U.S., which translates to a significant amount of geographic diversification.

PGHYX Barchart Interactive Chart 04 27 2021
 

Source: Barchart.com

Find out about the funds suitable for your portfolio by using our free screener.

3. Artisan High Income Investor Fund (ARTFX)

The third place on the list belongs to the Artisan High Income Investor Fund (ARTFX). The fund generated a robust 26.47% trailing one-year return with a 0.96% expense ratio and a 5.66% yield, making it the lowest cost and highest yielding fund on the list.

The fund’s strategy is to invest in corporate bonds, loans, and other securities of leveraged corporate issuers to take advantage of the illiquidity premium and the asymmetric risk profile in credit investments.

The fund is managed by Bryan Krug, CFA, Managing Director of Artisan Partners and Portfolio Manager on the credit team, who has been managing the fund for about seven years.

The fund holds just over 200 securities in its portfolio, including 85% bonds and 13% cash. Nearly all of these holdings are in the U.S. energy sector with a 98.4% weighting in energy and an 81% weighting in the U.S., making it the least diversified fund on the list.

ARTFX Barchart Interactive Chart 04 27 2021
 

Source: Barchart.com

Want to learn more about portfolio rebalancing? Click here.

The Bottom Line

High yield bonds have been a popular asset class over the past decade amid record low interest rates. With the recent rise in inflation, these bonds could become less attractive for many investors, although the fundamentals for many issuers have improved in the wake of government support for businesses during the COVID-19 pandemic.

Make sure to visit our News section to catch up with the latest news about mutual fund performance.

Note: Trailing one-year total returns (daily) as of April 21, 2021.


Sign up for Advisor Access

Receive email updates about best performers, news, CE accredited webcasts and more.

Popular Articles

Download our free report

Find out why $30 trillon is invested in mutual funds.

Why 30 trillion is invested in mutual funds book

Why 30 trillion is invested in mutual funds book

Download our free report

Find out why $30 trillon is invested in mutual funds.

Why 30 trillion is invested in mutual funds book

Download our free report

Find out why $30 trillon is invested in mutual funds.


Read Next