Best High-Yield Bond Funds: A Strategic Guide for Average Investors

For individual investors seeking to build a diversified fixed-income portfolio, high-yield bond funds represent one of the most practical solutions available in today’s market. These funds provide exposure to below-investment-grade securities—often called junk bonds—while offering professional management that helps reduce overall portfolio risk. What makes the best bond fund choice even more compelling is that these securities typically deliver superior returns compared to investment-grade alternatives, while remaining less vulnerable to interest rate movements due to their higher yield profiles.

Why High-Yield Bond Funds Are Considered Top Choices

The appeal of high-yield bond funds lies in their structural advantages for individual investors. By pooling capital into a single fund vehicle, investors gain immediate diversification across dozens of securities that would be impractical to purchase individually. This diversification acts as a natural risk buffer, reducing the impact of any single bond default on overall returns. Additionally, because high-yield bonds generate higher income streams than government or corporate bonds with higher credit ratings, they create a favorable risk-return dynamic—especially in volatile rate environments where investors face erosion of returns on safer alternatives.

Three funds have emerged as leaders in this space, each earning top ratings from Zacks and demonstrating consistent ability to outpace their peer group: PIMCO High Yield Spectrum [PHSAX], Nuveen High Yield Income Fund [NCOAX], and Manning & Napier High Yield Bond Series [MNHYX].

Comparing Three Outstanding High-Yield Bond Funds

PIMCO High Yield Spectrum: Sophisticated Multi-Strategy Approach

PIMCO High Yield Spectrum fund distinguishes itself through a flexible investment mandate that extends beyond traditional bond holdings. The fund’s managers deploy capital across high-yield bonds while also maintaining positions in convertible securities, warrants, and forward contracts. The portfolio additionally incorporates derivative strategies including credit default swaps and total return swaps, allowing managers to express complex market views with precision.

The fund’s performance reflects this sophistication: PHSAX has delivered three-year annualized returns of 10.1%, placing it among the strongest performers in the category. As of late 2025, the fund maintained 71.1% of assets in miscellaneous bonds, with the remainder allocated to alternative strategies designed to enhance yield and manage duration risk.

Nuveen High Yield Income Fund: Core Plus Strategy with Global Reach

Nuveen High Yield Income Fund takes a more straightforward approach, focusing primarily on below-investment-grade debt instruments issued by both domestic U.S. companies and foreign corporations that trade either over-the-counter or on established exchanges. This fund’s advisors maintain flexibility to invest in unrated securities that their portfolio managers believe offer comparable risk-adjusted quality to rated instruments.

The fund’s three-year annualized returns reached 9.9%, with an expense ratio of 1.0%, making it a cost-efficient option for yield-seeking investors. NCOAX offers an accessible entry point into high-yield strategies without excessive cost drag.

Manning & Napier High Yield Bond Series: Balanced Flexibility

Manning & Napier High Yield Bond Series rounds out the trio with a balanced approach that incorporates below-investment-grade securities alongside exchange-traded funds, bank loans, and derivative instruments. This fund maintains the option to venture into emerging market debt denominated in U.S. dollars, provided by both foreign and U.S. corporations and governments.

With three-year annualized returns of 9.8%, MNHYX delivers competitive performance while maintaining broad portfolio flexibility. Scott Friedman has managed the fund since March 2021, bringing continuity to the investment process.

Selecting the Best Bond Fund for Your Situation

When evaluating which high-yield bond fund represents the best bond fund choice for individual portfolios, investors should consider their specific objectives. Those seeking maximum return potential and comfortable with derivative strategies may find PIMCO’s approach most aligned with their goals. Investors prioritizing cost efficiency and straightforward high-yield exposure should examine Nuveen’s offering. Those wanting balanced flexibility with emerging market access might prefer Manning & Napier’s strategy.

All three funds have demonstrated their ability to navigate changing credit conditions while delivering strong risk-adjusted returns, making each a credible component of a diversified fixed-income allocation.