Bond funds are very popular among conservative investor as well as retiree. Bond funds can provide regular income to support personal expense, home improvement project, etc. One of the highest yielding bonds is known as high yield bond or non investment grade bond. This bond is also known as junk bond. This bond usually is lower rated than investment grade bond. It can come either from government bond (especially emerging market bond), and corporate bond.
For past article, I have provided the top performer high yield bond funds 2011 (up to May 2011). The following T. Rowe Price High Yield Fund is well known and has received various awards from various sources such as Morningstar, USNews , etc. Details about this fund will be described below.
T. Rowe Price High Yield Fund (Ticker: PRHYX)
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| TRP High Yield Fund details |
This T. Rowe Price High Yield Fund is seeking high current income and some capital appreciation from bond portfolio. This T. Rowe Price fund will focus primarily on the higher-quality range (BB and B) of the high-yield market. The fund invests most of its net assets (>80%) in a broadly diversified portfolio of high yield corporate bonds or junk bonds, income-producing convertible bonds, and below investment grade preferred stocks. The fund's weighted average maturity is normally in the 5- to 10-year range.
Note: This non investment grade bonds represent a higher risk of default and tend to be more volatile than higher-rated bonds (i.e. investment grade bonds).
- Fund Inception Date: December 31, 1984
- Ticker Symbol: PRHYX
- CUSIP: 741481105
- Beta (3yr): 0.99
- Rank in category: 29
- Category: High Yield Bond
- Yield: 7.48%
- Expense ratio: 0.76%
- Sales Load: 0%
- Average Maturity: 6.61 years
- Average Duration: 3.55 years
- Total Assets: $8.5 billion
- Capital Gains: N/A
- Number of Years Up: 21 years
- Number of Years Down: 5 years
Since June 1996, Mark J. Vaselkiv has been the lead manager of this T. Rowe Price fund. As part of no load fund, this fund’s annual expense ratio is 0.76%. The fund also has a dividend yield of 7.48% per year. This dividend is paid monthly. This expense figure is a little bit lower than the average in the High Yield Bond category which is 1.18%. Investor will need $2,500 minimum balance to invest in a regular brokerage account and $1,000 to invest in tax deferred IRA account.
Morningstar has rated 5 stars rating for this PRHYX fund. The best 1-year total return was recorded in 2009 with 49.16% within the 21 years positive years. The worst performance occurred in 2008 with -24.45%. The fund’s performance is as follows:
- 1-Year: 17.97%
- 3-Year: 10.80%
- 5-Year: 8.50%
- 10-Year: 8.36%
There is no other class to invest in this top taxable bond fund. PRHYX fund can be bought from 76 brokerages include Northwestern Mutual Inv Srvc, TD Ameritrade Institutional Services, Schwab Institutional & Retail, Fidelity Institutional FundsNetwork, T. Rowe Price, JPMorgan, Firstrade, Scottrade TF, etc. For details about this fund, you can check with your local brokerage agent or brokerage account.
As of April 2011, these fund assets are allocated as follows 77.5% in domestic bonds, 14.6% in foreign bond, 2.9% in cash, 2.4% in domestic stock, 1.4% in preferred stocks, 1.1% in convertible bonds, and 0.1% in foreign stock. The fund weighted average duration is 3.55 years. The fund also has 566 bond holdings. The top 8 major market sectors are communication services (21.68%), consumer cyclical (16.43%), basic materials (14.97%), financial services (9.92%), technology (7.58%), real estate (7.57%), energy (6.155), and utilities (5.8%). The 5 largest bond holdings include Ally preferred, Avaya Inc, CDW Llc / CDW finance, DP World Sukuk Ltd, and E Trade Financial Corp.
This fund also involves principal investment risks: interest rate risk, credit risk, liquidity risk, foreign investing risk, and derivatives risk.
Disclosure: No Position
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