Invesco High Yield Fund Institutional Class (AHIYX)
Expense Ratio: 0.59%
Expected Lifetime Fees: $18,335.63
The Invesco High Yield Fund Institutional Class fund (AHIYX) is a High Yield Bond fund started on 4/30/2004 and has $1.40 billion in assets under management. The current manager has been running Invesco High Yield Fund Institutional Class since 5/5/2001. The fund is rated by Morningstar. This fund does not charge 12b-1 fees.
SPDR Barclays Capital High Yield Bond (JNK)
Expense Ratio: 0.41%
Expected Lifetime Fees: $12,984.20
The SPDR Barclays Capital High Yield Bond (JNK) is an Exchange Traded Fund. It is a "basket" of securities that index the High Yield Bond investment strategy and is an alternative to a High Yield Bond mutual fund. Fees are very low compared to a comparable mutual fund like Invesco High Yield Fund Institutional Class because computers automatically manage the stocks.
|Mutual Fund Name||Ticker Symbol||Turnover||Assets (M)||Annual Fees|
|American Funds American Hi Inc Tr F-2||AHIFX||51.0%||18,100||0.46%|
|American Funds American Hi Inc Tr R5||RITFX||51.0%||18,100||0.42%|
|American Funds American Hi Inc Tr R6||RITGX||51.0%||18,100||0.37%|
|Federated Instl High Yield Bond Instl||FIHBX||23.0%||1,100||0.50%|
|Lazard US High Yield Instl||LZHYX||27.0%||178||0.55%|
|Metropolitan West High Yield Bond I||MWHIX||54.0%||2,200||0.56%|
|PIMCO High Yield Instl||PHIYX||50.0%||16,800||0.55%|
|PIMCO High Yield Spectrum Fund Institutional Class||PHSIX||44.0%||1,200||0.55%|
|Principal High Yield Inst||PHYTX||82.8%||3,500||0.57%|
|RidgeWorth Seix High Yield I||SAMHX||83.0%||2,100||0.51%|
|T. Rowe Price Instl High Yield||TRHYX||77.6%||2,600||0.50%|
|TIAA-CREF High-Yield Fund Premier Class||TIHPX||62.0%||1,400||0.55%|
|TIAA-CREF High-Yield Inst||TIHYX||62.0%||1,400||0.40%|
|Vanguard High-Yield Corporate Adm||VWEAX||26.0%||17,000||0.13%|
|Vanguard High-Yield Corporate Inv||VWEHX||26.0%||17,000||0.23%|
|Wells Fargo Advantage High Income I||SHYYX||78.0%||765||0.51%|
Turnover represents how much of a mutual fund's holdings are changed over the course of a year through buying and selling. Active mutual funds have an average turnover rate of about 85%, meaning that funds are turning over nearly all of their holdings every year. A high turnover means you could make lower returns because: 1) buying and selling stocks costs money through commissions and spreads and 2) the fund will distribute yearly capital gains which increases your taxes. Look for funds with turnover rates below 50%. For comparison, ETF turnover rates average around 10% or lower.
Generally, smaller funds do better than larger ones. The more assets in a mutual fund, the lower the chance that it will beat its index. Managers outperform an index by choosing stocks that are undervalued. In order to find these undervalued stocks, the manager has to know more than his competitors to develop an "edge." There are only a finite number of stocks a mutual fund manager can reasonably analyze and actively track to gain such a competitive edge. When the fund has more assets, the manager must analyze large companies because he needs to take larger positions. Large companies are more efficiently priced in the market and it becomes increasingly difficult to get an edge.