The following are some High Yield Bond Funds to consider. Please do your own research on these Funds to see whether they are still appropriate and worth investing into:
Municipal Bonds
Municipal Bonds, or 'Munis' have higher after-tax yields than taxable treasury and corporate bonds. If you buy 'Munis' in your home state, they are usaully tax free.
Here are some Municipal-Bond Funds worth looking into (take note these are leveraged Closed-Ended funds), that are categorize into National and Single State funds (Yields may have fluctuated higher or lower from the figures shown):
National
- BlackRock Ins. Muni Term 2010 (BMT) - 6% Yield
- BlackRock Ins. Muni Term 2008 (BRM) - 6% Yield
- Federated Premium Intermediate (FPT) - 5% Yield
- Eaton Vance Insured Muni (EIM) - 6% Yield
- Eaton Vance Insured Muni 2 (EIV) - 6% Yield
Single State
- Eaton Vance Michigan (MIW) - 6% Yield
- Eaton Vance New York (ENX) - 6% Yield
- Eaton Vance Pennsylvania (EIP) - 7% Yield
- Eaton Vance California (EVM) - 6% Yield
- Eaton Vance New Jersey (EMJ) - 6% Yield
- Eaton Vance Ohio (EIO) - 6% Yield
*Note: Usually there is no maturity on Bond Funds since the fund manager is always buying and selling these funds. The funds that are mentioned above on the other hand all have maturities, therefore they work like individual bonds. This removes the risk of fluctuating interest rates.
Foreign Bonds for your portfolio
Bonds that offer very high yields are usually Foreign and Emerging Market Bonds. Emerging Market Bonds are often referred to as 'Junk' bonds because of their low credit rating.
Foreign Bond Funds (especially Unhedged Foreign Bond) typically do well when the U.S. dollar is falling against the local currency. An Unhedged Foreign Bond Fund to consider is the Aberdeen Global Income (Closed-Ended) Fund, which invests in stable foreign bonds from Australia, Canada, New Zealand and U.K. This fund offers a Yield close to 6%.
Riskier and Highest Yielding Bonds - Emerging Market Bonds
You may want to place some money in these Emerging Bond Funds. Emerging Bond Funds offer excellent yield, but there are dangers default risk. So, invest in these type of bonds only with money that your can afford to lose. Here are some better Emerging Bond Funds to consider. These funds short maturities, lower expenses ratios, and high credit quality:
Open-Ended Funds
- Fidelity New Market Income (FNMIX) - 6% Yield
- T. Rowe Price Emerging Market Bond (PREMX) 6% Yield
Closed-Ended Funds
- Global High Income Dollar Fund (GHI) - 11% Yield
- Morgan Stanley Emerging Markets Debt (MSD) - 8% Yield
- Saloman Emerging Markets Income II (EDF) - 7% Yield
- Saloman Emerging Markets Income Float (EFL) - 8% Yield
- Scudder Global High Income (LBF) - 7% Yield
- Templeton Emerging Markets Income (TEI) 8% Yield
The reason I don't mention U.S. Government or Corporate Bonds, and other High Credit Rating bonds is that their yields are disappointingly low. With inflation hovering around 5% annually, these 'safe' bonds can never match up with average yields as low as 3%.
If you really want some 'safer' bond recommendations, take a look at the following:
Short-Term Government Bond Funds
- Excelsior Short-Term Government (UMGVX) - 3% Yield
- Payden U.S. Government (PYUSX) - 2% Yield
- Vanguard Short-Term Federal (VSGBX) - 3% Yield
More Short-Term Bond Funds
- Constellation CIP Short Duration Fixed Income (TSDGX) - 3% Yield
- Constellation CIP UltraShort - 2% Yield
- Fidelity Short-Term Bond (FSHBX) - 2% Yield
- Harbor Short Duration (HASDX) - 3% Yield
- Payden Short Bond Fund (PYSBX) - 2% Yield
- Schwab Short-Term Bond (SWBDX) - 3% Yield
- Schwab Yield Plus (SWYPX) - 3% Yield
- TIAA-CREF Short-Term Bond (TCSTX) - 3% Yield
- USAA Short-Term Bond (USSBX) - 3% Yield
- iShares Lehman 1-3 Year Treasury (SHY) - 2% Yield
- Vanguard Short-Term Treasury Bond (VFISX) - 3% Yield
- Vanguard Short-Term Bond Index (VBISX) - 3% Yield
- Vanguard Short-Term Inv. Grade Bond (VFSTX) - 4% Yield
Treasury Inflation-Protected Securities (TIPS) Funds
- American Century Inflation Bond (ACITX) - 4% Yield
- iShares Inflation-Protected Securities (TIP)* - 5% Yield
- TIAA-CREF Inflation-Linked Bond (TCILX) - 4% Yield
- Vanguard Inflation-Protected Securities (VIPSX) - 4% Yield
*iShare's TIP fund is a popular fund for investors looking to invest in TIPS.
Medium-Term Bond Funds
- Dodge & Cox Income (DODIX) - 4% Yield
- Fidelity Intermediate Bond (FTHRX) - 3% Yield
- iShares Lehman Brothers Aggregate (AGG) - 4% Yield
- Schwab Total Bond Market Index (SWLBX) - 3% Yield
- TIAA-CREF Bond Plus (TIPBX) - 4% Yield
- T. Rowe Price U.S. Bond Index (PBDIX) - 4% Yield
- USAA Income (USAIX) - 5% Yield
- Vanguard Int.-Term Inv. Grade Bond (VFICX) - 5% Yield
- Vanguard Int.-Term Bond Index (VBIIX) - 5% Yield
- Vanguard Int.-Term Treasury (VFITX) - 4% Yield
- Vanguard Total Bond Market Index (VBMFX) - 4% Yield
More Municipal Bond Funds to consider:
- Fidelity Spartan Short-Term Muni (FSTFX) - 3% Yield
- Fidelity Spartan Int.-Term Muni (FLTMX) - 4% Yield
- USAA Tax-Exempt Short (USSTX) - 3% Yield
- USAA Tax-Exempt Int.Term (USATX) - 4% Yield
- Vanguard Ltd.-Term Tax Exempt (VMLTX) - 3% Yield
- Vanguard Int.-Term Tax Exempt (VWITX) - 4% Yield
- Vanguard Short-Term Tax Exempt (VWSTX) - 2% Yield
Mortgage-Backed Bonds
The following are some Mortgage-backed, or Mortgage related bond funds. With the current Sub-Prime lending problems hurting Mortgage Corporations/Asscociations like Freddie Mac and Fannie Mae, I suggest you carefully do your homework before you invest in these instruments.
Mortgage Security Funds
- Dreyfus U.S. Mortgage Securities (DIGFX) - 5% Yield
- Fidelity Mortgage Securities (FMSFX) - 3% Yield
Some Ginnie Mae (Government National Mortgage Association) Bond Funds
- Fidelity GNMA (FGMNX) - 4% Yield
- Payden GNMA (PYGNX) - 6% Yield
- T. Rowe Price GNMA (PRGMX) - 4% Yield
- USAA GNMA (USGNX) - 5% Yield
- Vanguard GNMA (VFIIX) - 5% Yield
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