These Tamer High-Yield Bond Funds Are Worth a Look
Short-duration high-yield funds are a less risky way to boost income and get protection from rising rates than most in the broader category.
With rates at historic lows and compressed credit spreads at the top of many investors' minds, short-duration high-yield bond strategies can be an attractive way to supplement income while limiting interest-rate risk and some of the credit risk found in traditional high-yield funds. While definitions can vary, these strategies focus on high-yield bonds with a maturity of one to five years (these represent roughly 30% to 40% of the broader universe) or a duration (a measure of interest-rate sensitivity) of zero to three years. This group of funds represents a fairly small subset of the high-yield bond Morningstar Category (approximately 25 distinct offerings).
Sam Kulahan does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.