These funds returned 5.4% on average in the first quarter. Further, all 354 high-yield bond funds tracked ended the period in positive territory black, preliminary figures from Standard & Poor’s (S&P) fund database showed.
S&P Director Joel Friedman attributes the interest in high-yield bonds to low inflation rates, “which makes their yields look more attractive compared to other fixed-income investments, like Treasuries or money-market funds.”
“Helping the cause is that investors gained confidence in high-yield bonds as default rates for the securities stabilized or declined in recent months,” Friedman continued. The 12-month rolling average default rate for domestic junk bonds stood at 6.9% on March 10, down from 10.2% in April of 2002.
As noted before, every fund in the S&P database had a winning quarter, particularly, the first quarter’s top five performing funds:
- Fidelity Capital & Income (10.4%)
- Loomis Sayles Institutional High Income (10.4%)
- Fidelity Advisor High Income (10.1%)
- MainStay Funds High Yield Corporate Bond (8.3%)
- Conseco High Yield (8.0%)
Conversely, the first quarter’s worst performers were:
- Strong Short Term High Yield (2.4%)
- Neuberger Berman High Income Bond (1.7%)
- EquiTrust Series: Stategic Yield (1.6%)
- Regions Morgan Keegan Select High Income (1.5%)
- Northeast Investors Trust (0.6%)