Snag These Three Top-Yielding Bond Funds for Impressive Gains

High-Yield Bonds: Distinct Performance and Opportunities

Unlike traditional investment-grade bonds, high-yield bonds often mirror the behavior of equities. These bonds are frequently issued by smaller firms with less robust financial profiles, yet they tend to benefit when economic conditions improve. While high-yield bonds carry greater credit risk, they are less sensitive to changes in interest rates, offering a unique avenue for returns. After facing challenges during the early stages of the pandemic, demand for high-yield bonds rebounded following the Federal Reserve's rate reductions and the reopening of the economy. As economic activity strengthens, the pursuit of yield has intensified, positioning these bonds for potential growth.

Top-Rated High-Yield Bond Mutual Funds

Here are three highly ranked high-yield bond mutual funds:

• Neuberger Berman Floating Rate Income (NFIAX)
• Franklin High Income (FHAIX)
• AB High Income (AGDAX)

Each fund has received a Zacks Mutual Fund Rank #1 (Strong Buy), indicating strong prospects for outperforming similar funds. For a comprehensive list of high-yield bond funds, please参 see the complete list.

Neuberger Berman Floating Rate Income (NFIAX)

This fund primarily invests in floating-rate securities, loans, and related instruments from companies offering exposure to such assets. The fund managers focus on senior-secured, floating-rate loans and below-investment-grade debt issued in U.S. dollars by both domestic and international entities.

Over the past three years, Neuberger Berman Floating Rate Income has delivered an annualized return of 8%. As of October 2025, 75.1% of its net assets were allocated to Total Miscellaneous Bonds.

Franklin High Income (FHAIX)

Franklin High Income targets high-yield, lower-rated debt instruments, including bonds, notes, convertibles, and other securities commonly referred to as junk bonds. These assets offer higher returns to compensate for their increased risk.

The fund has achieved a three-year annualized return of 9.1%. Glenn Voyles has managed FHAIX since May 2015.

AB High Income (AGDAX)

AB High Income seeks income from a mix of government, corporate, emerging market, and high-yield sources, investing in a broad range of fixed-income securities across both developed and emerging markets. Its portfolio includes U.S. and international corporate and sovereign debt, with flexibility regarding currency denomination.

The fund has posted a three-year annualized return of 9%, and AGDAX features an expense ratio of 0.86%.

For more details on Zacks rankings and historical performance of high-yield bond funds, please view the complete list.

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Original article published on Zacks Investment Research (zacks.com).

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