Mutual funds that seek to provide impressive returns by investing in below investment-grade bonds, also known as junk bonds, are generally known as high yield bond mutual funds. These funds are not only expected to provide higher returns than those investing in investment-grade securities, but also the high yield feature of junk bonds makes them less vulnerable to interest rate fluctuations. Though junk bonds are considered to be riskier than investment-grade debt securities, mutual funds maintaining a well-diversified portfolio of these securities may reduce the level of risk.   

Below we share with you 3 top-ranked high-yield bond mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and we expect the fund to outperform its peers in the future. Investors can click here to see the complete list of high-yield bond mutual funds to view their Zacks Rank and past performance.

PIMCO High Yield Spectrum A (PHSAX - MF report) seeks to maximize total return. PHSAX invests a lion’s share of its assets in securities that are rated below investment grade, commonly known as "junk bonds,” and are expected to provide high yield. PHSAX may also invest a notable portion of its assets in derivative instruments, which may include credit default swap agreements and total return swap agreements. PIMCO High Yield Spectrum A has a year-to-date return of 6.9%.

Andrew Jessop is the fund manager of PHSAX since 2010. 

Voya High Yield Portfolio S (IPHYX - MF report) is expected to maintain a diversified portfolio by investing a major portion of its assets in high yield debt securities.  IPHYX invests in securities that are rated below investment grade by popular rating agencies including nationally recognized statistical rating organization (NRSRO), Standard & Poor's Ratings Services and Moody's Investors Service, Inc. Voya High Yield Portfolio S has a year-to-date return of 7.2%.

IPHYX has an expense ratio of 0.73% as compared to the category average of 1.07%.

Thrivent High Yield A (LBHYX - MF report) seeks high level of current income. LBHYX invests a large chunk of its assets in below investment grade debt securities including notes and debentures. LBHYX may also invest in other debt obligations such as mortgaged-backed securities, convertible bonds and convertible stock. Thrivent High Yield A has a year-to-date return of 6.3%.

As of March 2016, LBHYX held 278 issues, with 1.60% of its assets invested in Sprint Nextel 144A 9%. 

American Century High-Yield Investor (ABHIX - MF report) invests a majority of its assets in high yield securities, which include corporate bonds and other debt instruments. The rest of ABHIX’s assets are invested in equity securities. ABHIX may invest not more than 40% of its assets in foreign debt securities. ABHIX may also invest a maximum of 20% of its assets in money market instruments and U.S. government securities that have short-term maturity durations. ABHIX is expected to invest a larger portion of its assets in debt securities with maturity periods between intermediate and long term. American Century High-Yield Investor has a year-to-date return of 7.5%.

ABHIX has an expense ratio of 0.85% as compared to the category average of 1.07%.