Below, we've selected the top three high-yield corporate bond funds for 2020 by 1-year total return.
By using Investopedia, you accept our A floating rate fund invests in bonds and debt instruments whose interest payments fluctuate with an underlying interest rate level. A fallen angel is a bond that had an investment-grade rating but has been reduced to junk bond status due to the issuer's weakened condition. During that time, the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) returned an average of 5.93% per year. The best-performing high-yield corporate bond fund, based on performance over the past year, is the Metropolitan West High Yield Bond Fund (MWHYX). All figures are as of April 14, 2020. Investopedia uses cookies to provide you with a great user experience. A tracker fund is an index fund that tracks a broad market index or a segment thereof.How Floating Rate Funds Can Offer Yields in a Rising Rate Market
A floating rate fund is a fund that invests in financial instruments paying a variable or floating interest rate. The Xtrackers Low Beta High Yield Bond ETF aims to match the performance of the Solactive USD High Yield Corporates Total Market Low Beta Index. This is a list of all US-traded ETFs that are currently included in the High Yield Bonds … High-yield bond portfolios concentrate on lower-quality bonds, which are riskier than those of higher-quality companies. By using Investopedia, you accept our With investment-grade bonds, investors can buy bonds issued by individual companies or governments and hold them directly. This result is in accord with modern portfolio theory ( You can learn more about the standards we follow in producing accurate, unbiased content in our Junk bonds are debt securities rated poorly by credit agencies, making them higher risk (and higher yielding) than investment grade debt. Collateralized Bond Obligation (CBO) is an investment-grade bond backed by a pool of junk bonds. Default is itself the most significant risk for high-yield bond investors. These include white papers, government data, original reporting, and interviews with industry experts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.
All figures are as of April 14, 2020. Similarly, funds not open to new investors and those with a minimum investment of more than $10,000 were excluded. This fund aims to provide exposure to the full high-yield bond universe, repositioning itself over the course of the credit cycle in order to better manage risk-adjusted performance. Investopedia requires writers to use primary sources to support their work. When they hold bonds directly, investors can build Small investors should generally avoid buying individual high-yield bonds directly because of high default risk. In actual practice, the gain over investment-grade bonds is lower because there will be more defaults. High-yield bonds are typically broken down into two sub-categories: A high-yield, or "junk" bond has a lower credit rating and thus pays a higher yield due to having more risk than higher rated bonds. While high-yield bonds suffer from the negative "junk bond" image, they actually have higher returns than investment-grade bonds over most long holding periods.
The Vice Fund is a mutual fund managed by USA Mutuals which focuses on vice industries considered to be socially irresponsible investments or "sin stocks.” The offers that appear in this table are from partnerships from which Investopedia receives compensation. Generally, investors in high-yield bonds can expect at least 150 to 300 basis points in additional yield compared to investment-grade bonds at any given time. We also reference original research from other reputable publishers where appropriate. The Secondary Market Corporate Credit Facility (SMCCF) is a Fed program to support the corporate bond market during the COVID-19 coronavirus crisis. FDHY typically invests at least 80% of its assets in high-yield bonds in its goals of seeking a high level of income and capital appreciation. High yield bonds hold the potential for higher returns for two reasons. Higher coupon rates In general the issuers of high yield bonds are considered less likely to make interest payments than issuers of investment grade corporate debt. From a technical viewpoint, a high-yield, or "junk" bond is pretty much the same as regular corporate bonds since they both represent debt issued by a firm with the promise to pay interest and return the principal at maturity.