High-yield bond mutual funds provide the best choice for those looking to invest in below-investment-grade bonds, also known as junk bonds. Though bonds rated below investment grade are believed to be riskier than investment grade bonds, a well-diversified portfolio of these securities reduce the risk of a portfolio. Thus mutual funds maintaining a portfolio of these securities are best for investors as these allocate their assets in such securities from a wide range of sectors.

Moreover, these funds are expected to provide better returns than those investing in securities with higher ratings, including government and corporate bonds. Also, due to their higher yield feature, junk bonds are believed to be less susceptible to interest rate fluctuations.

Below we share with you three top-ranked high-yield bond mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future.

T. Rowe Price High Yield Fund (PRHYX - Free Report) aims for current income and capital growth. The fund invests the majority of its assets in a diversified portfolio of high-yield corporate bonds. It also invests in income-producing convertible securities and preferred stocks. These securities are usually rated below investment grade or not rated by any notable credit rating agency, but considered to be below investment grade by T. Rowe Price. PRHYX has returned 12.4% on a year-to-date basis.

PRHYX has an annual expense ratio of 0.72%, lower than the category average of 1.01%.

Vanguard High-Yield Corporate Fund Investor Shares (VWEHX - Free Report) aims to offer high current income. The fund invests the majority of its assets in a diversified group of high-yielding, higher-risk corporate bonds, which have medium- and lower-range credit ratings. In fact, the fund mostly invests in corporate bonds that are rated below Baa by Moody's or have an equivalent rating by any other independent bond-rating agency. If the bonds are unrated, the fund’s advisor determines its quality before investing. VWEHX has returned 13.7% on a year-to-date basis.

Michael L. Hong is the fund manager of VWEHX since 2008.

Voya High Yield Portfolio Class S (IPHYX - Free Report) aims to provide a high level of current income along with total return. The fund invests the majority of its assets in a diversified portfolio of high-yield bonds, known as junk bonds. IPHYX has returned 12.9% on a year-to-date basis.

As of October 2019, IPHYX held 379 issues, with 0.95% of its total assets invested in HCA Inc. 5.38%.