Three High-Yield Junk Bond Funds Worth Your Attention

For the average investor seeking better returns without taking on excessive risk, junk bond funds offer a compelling solution. These investment vehicles hold a diversified portfolio of below-investment-grade bonds—commonly called junk bonds—that collectively reduce individual security risk while delivering superior yields compared to traditional corporate or government bonds. The beauty of this approach lies in its mathematical advantage: higher-yielding securities are often less vulnerable to interest rate changes, making them a more stable long-term holding despite their riskier individual components.

Why Junk Bond Funds Make Sense for Average Investors

Before diving into specific recommendations, it’s worth understanding why the junk bond fund structure works so well for ordinary people. Individual investors lack the expertise and capital to build a properly diversified portfolio of high-yield securities on their own. A professional-managed fund solves this problem by spreading your investment across dozens or hundreds of bonds, effectively neutralizing the impact of any single default. This risk mitigation strategy is the primary reason these funds outperform their lower-yielding counterparts over market cycles.

Three Top Performers You Should Consider

Three funds consistently stand out for their stellar performance and professional management: PIMCO High Yield Spectrum (PHSAX), Nuveen High Yield Income Fund (NCOAX), and Manning & Napier High Yield Bond Series (MNHYX). Each has earned Zacks Mutual Fund Rank #1 status, a designation reserved for funds expected to surpass their peer group.

PIMCO High Yield Spectrum deploys the majority of its assets into high-yield investment bonds, including convertibles, warrants, and sophisticated derivative instruments like swap agreements. As of September 2025, the fund allocated 71.1% of its holdings to miscellaneous bonds, demonstrating a concentrated commitment to its core strategy. The fund posted three-year annualized returns of 10.1%, reflecting solid performance even during challenging market conditions.

Nuveen High Yield Income Fund takes a broader approach, investing in below-investment-grade debt issued by both domestic companies and foreign corporations in U.S. dollar denominations. The fund’s managers are willing to evaluate unrated bonds when they believe the credit quality justifies inclusion. This flexibility has contributed to three-year annualized returns of 9.9%, achieved while maintaining a reasonable 1% expense ratio.

Manning & Napier High Yield Bond Series rounds out the trio with a multi-asset approach that extends beyond traditional bonds to include bank loans, exchange-traded funds, and derivative instruments with similar economic characteristics. The fund may also explore U.S. dollar-denominated fixed-income securities from emerging market corporations and governments. Scott Friedman has guided this fund as portfolio manager since March 2021, delivering three-year annualized returns of 9.8%.

Performance Metrics That Matter

The returns tell the story: these three funds delivered 10.1%, 9.9%, and 9.8% respectively over the three-year period ending in September 2025. While past performance never guarantees future results, this consistency across different management philosophies suggests that the current junk bond market offers genuine opportunity. Combined with expense ratios that remain reasonable, these vehicles provide an efficient pathway into high-yield fixed income.

For investors ready to explore high-yield opportunities, these Zacks-ranked junk bond funds represent a well-vetted starting point that balances performance potential with professional risk management.