3 High-Yield Funds That Can Weather Tough Times

Looking to add a shot of yield to your bond portfolio? Your timing isn’t great. High-yield bonds’ spreads over Treasury bonds are near historical lows, and corporate layoffs are surging, a sign that economic growth is shrinking.

But all is not lost. High-yield bonds still offered more than a 3% yield boost over Treasuries as of mid-November 2025. It may not be a great time to get aggressive with sub-investment-grade exposure, given macroeconomic uncertainty and tight spreads, but a well-run, relatively conservative high-yield bond fund can still provide extra income while limiting default risk.

Let’s take a closer look at three promising options.

PGIM Short Duration High Yield Income HYSAX boasts a proven veteran team and a prudent valuation-based approach. Three of the five portfolio managers have served in that role for more than a decade, including leader Robert Cignarella, and more than 40 analysts support the firm’s global leveraged finance research.

The team employs a disciplined strategy, focusing primarily on security selection rather than industry-level bets and bearing both valuation and default risk in mind when setting position sizes. The team prioritizes the bonds of good businesses with middling financial health and avoids most companies with weak fundamentals. The fund has thus held up well during most difficult times for high yield during Cignarella’s tenure. In 2015 and 2018, for example, this fund lost less than 95% of its Morningstar Category peers. It did have a handful of holdings run into trouble in 2022’s sharp decline, but its short-duration mandate limited losses when rates spiked. The same bonds later rebounded, leading to solid gains in 2024 and the first 11 months of 2025, though the fund trailed more rate-sensitive peers.

The team remains vigilant. Management is not finding much to like within the red-hot tech sector, believing that companies’ tech budgets will soon be cut. The team is also avoiding the bottom rungs of the high-yield universe; it recently invested 6.2% of its assets in bonds rated lower than B, well below the 16.1% category average.

The managers of Vanguard High-Yield Corporate VWEHX have fairly short tenures, but the fund’s conservative strategy and low fees lend it plenty of appeal. Since August 2022, one-third of the fund has been managed by Vanguard’s internal high-yield group, while two-thirds remain with Wellington Management, which previously ran the entire portfolio. The portfolio managers from each entity joined the fund on that date, but both follow the fund’s long-standing approach of treading lightly among the lowest-rated portion of the high-yield universe. Indeed, at the end of September 2025, the fund invested just 4.7% of its assets in bonds rated lower than B, just over one-fourth of the category average. Such prudence helped the fund hold up better than most peers in high yield’s slumps in 2015 and 2022, though the fund roughly matched the category average in 2018’s high-yield dip. The current managers had little impact on the 2022 showing, but the fund appears to be in good hands.

Pimco High Yield PHDAX is backed by that firm’s formidable fixed-income resources, which include a sizable credit analyst team. That has given its three-person manager roster a leg up on peers, even though two of the managers just joined in 2023; the third is global credit specialist Sonali Pier, a named manager since 2019. Like previous managers, the current cohort focuses on higher-quality issuers within the high-yield universe; just 1.1% of assets were recently invested in bonds rated CCC or worse. This means the fund may lag when high-yield rallies, as was the case in 2024. But it has held up well in prior slumps, and the new managers are well-positioned to extend the fund’s record of attractive risk-adjusted returns.

This article first appeared in the December 2025 issue of Morningstar FundInvestor. Download a complimentary copy of FundInvestor by visiting this website.