Buy These 3 Top-Ranked High-Yield Bond Funds to Balance Risk

High-yield bond mutual funds provide the best choice for investors looking to invest in below investment-grade bonds, also known as junk bonds. Though bonds that are rated below investment grade are believed to be riskier than investment-grade bonds, a well-diversified portfolio of these securities reduces the risk of the portfolio. 

Thus, mutual funds maintaining a portfolio with these securities are the best method for investors as they allocate their assets in such securities from a wide range of sectors. Meanwhile, these funds are expected to provide higher returns compared to those investing in securities with higher ratings, including government and corporate bonds. Also, due to their higher yield feature, junk bonds are believed to be less susceptible to interest rate fluctuations. 

Below, we share with you three top-ranked high-yield bond mutual funds, viz., Fidelity High Income SPHIX, American Beacon SiM High Yld Opps SHOAX and Nuveen High Yield Income NCOAX. 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. 

Fidelity High Income fund invests primarily in income-producing debt securities, preferred stocks and convertible securities, most of which are below investment grade.  

Fidelity High Income fund has three-year annualized returns of 9.1%. Benjamin Harrison has been the fund manager of SPHIX since January 2022. 

American Beacon SiM High Yld Opps fund seeks to maximize current income by investing in a diversified portfolio of debt securities generally rated below investment grade (or, if unrated, deemed below investment grade by its sub-advisor) and invests at least 80% of its net assets plus borrowings in non-investment grade securities and/or instruments providing such exposure. 

American Beacon SiM High Yld Opps has three-year annualized returns of 8.9%. SHOAX has an expense ratio of 1.08%. 

Nuveen High Yield Income fund invests most of its assets, along with borrowings, if any, in below-investment-grade debt instruments, such as bonds and loans issued by domestic companies and in U.S. dollar-denominated debt issued by foreign companies traded over-the-counter or listed on an exchange. NCOAX advisors also invest in unrated bonds, which, according to the fund's portfolio managers, are of similar quality. 

Nuveen High Yield Income fund has three-year annualized returns of 8.6%. As of the end of February 2026, SPHIX had 65.4% of its assets invested in Miscellaneous Bonds. 

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.

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