5 Top-Performing High-Yield Bond Funds

Diversified high-yield bond funds can provide additional income to a fixed-income portfolio. These are the best options, according to Morningstar analysts. We looked for funds with the best returns over the last one-, three-, and five-year periods. Offerings from Fidelity stood out, taking up two of the five spots. All names that passed the screen are actively managed.

• Artisan High Income Fund APHFX
• BlackRock High Yield Portfolio Fund BRHYX
• Fidelity Advisor Capital & Income Fund FIQTX
• Fidelity Capital & Income Fund FAGIX
• Franklin High Income Fund FHRRX

Over the last 12 months, this category returned 6.68%. On an annualized rate, high-yield bond funds have returned 8.83% over the last three years and 4.42% over the last five. That compares with the Morningstar US Core Bond Index, which has returned 6.48% over the last 12 months, gained 4.73% per year over the last three years, and lost 0.40% per year over the last five years.

What Are High-Yield Bond Funds?

High-yield bond portfolios concentrate on lower-quality bonds, which are riskier than those of higher-quality companies. These portfolios generally offer higher yields than other types, but they are also more vulnerable to economic and credit risk. These portfolios primarily invest in US high-income debt securities where at least 65% or more of bond assets are not rated or are rated by a major agency such as Standard & Poor’s or Moody’s at the level of BB (considered speculative for taxable bonds) and below.

Screening for the Top-Performing High-Yield Bond Funds

We looked at returns from the past one, three, and five years using data available in Morningstar Direct. We screened for open-ended and exchange-traded funds in the top 25% of the category using their lowest-cost primary share classes for those periods. We also filtered for funds with Morningstar Medalist Ratings of Bronze, Silver, or Gold. We excluded funds with assets under $100 million and analyst coverage that was not 100%. This left five investments.

Because the screen was created with the lowest-cost share class for each fund, some may be listed with share classes that are not accessible to individual investors outside of retirement plans, or they may be aimed at institutional investors and require large minimum investments. The individual investor versions of those funds may carry higher fees, reducing returns to shareholders. In addition, Medalist Ratings may differ among the share classes of a fund.

Artisan High Income Fund

• Morningstar Medalist Rating: Gold
• Morningstar Rating: ★★★★★

This $10.4 billion fund has gained 7.56% over the past year, while the average fund in its category is up 6.68%. The Artisan Partners fund, launched in October 2016, has climbed 9.99% over the past three years and 6.07% over the past five.

Manager Bryan Krug runs Artisan’s credit franchise, which launched December 2013, and this fund, which launched March 2014. Franchise assets have grown to over $11 billion, and the fund has earned one of the best records in the high-yield bond Morningstar Category.

This is a capacity-constrained strategy, so its April 2021 closure to new investors was an important step in protecting the integrity of Krug’s investment approach. Only a select few of its 200-plus category peers have ever fully or partially closed.

Performance has remained consistently impressive since the fund’s inception. Its institutional share class has beaten at least half of distinct category peers every calendar year from 2015 through 2024, and in five of those 10 years it beat more than 80%. Adjusted for volatility, returns looked equally impressive; over the trailing 10 years through March 2025, its information ratio was better than all but one peer, while its standard deviation (a measure of volatility) was average.

—Brian Moriarty, principal

BlackRock High Yield Portfolio Fund

• Morningstar Medalist Rating: Gold
• Morningstar Rating: ★★★★

This $26.2 billion fund has climbed 7.83% over the past year, outperforming the average fund in its category, which rose 6.68%. The BlackRock fund, launched in November 1998, has climbed 10.06% over the past three years and 5.27% over the past five.

BlackRock’s US high-yield bond strategy boasts a veteran management team and extensive supporting resources, coupled with a well-rounded investment approach.

The managers follow a flexible approach, emphasizing higher-quality bonds when riskier debt offers paltry compensation and leaning into lower-quality market segments when they think risk-taking pays off. With roughly USD 65 billion under management across its global high-yield strategies, the leveraged finance team has a large footprint in the high-yield market, so staying nimble can be tricky. The team attempts to overcome some of those challenges by broadening its scope to include bank loans (in its US-domiciled fund) and collateralized loan obligations (in its European vehicle), as well as investment-grade corporates (historically ranging between 0% and 15% of portfolio assets). The team can also venture into equities (up to 10% of portfolio assets).

In recent years, the strategy has also invested more in exchange-traded funds (which have reached roughly 10% of assets at times), credit default swaps, and total return swaps to quickly gain or trim diversified market exposure when such instruments are easier to trade or better priced than cash bonds. This flexible approach has resulted in an impressive long-term track record.

—Jeana Doubell, analyst

Fidelity Advisor Capital & Income Fund

• Morningstar Medalist Rating: Silver
• Morningstar Rating: ★★★★★

This $2.7 billion fund has climbed 9.38% over the past year, outperforming the average fund in its category, which rose 6.68%. The Fidelity fund, launched in October 2018, has climbed 10.85% over the past three years and 7.45% over the past five.

Fidelity Capital & Income Fund

• Morningstar Medalist Rating: Silver
• Morningstar Rating: ★★★★★

This $14.8 billion fund has climbed 9.33% over the past year, outperforming the average fund in its category, which rose 6.68%. The Fidelity fund, launched in November 1977, has climbed 10.95% over the past three years and 7.47% over the past five.

For both these Fidelity funds, the research engines powering the unconventional high-yield portfolios are the key to their success.

The team, which runs both funds, checks all the boxes. Veteran manager Mark Notkin has made his mark by translating bottom-up insights from supporting high-yield and equity research teams into a high-octane portfolio that has often featured upward of 20% in common stock over the past decade. With prolonged success, however, comes key-person risk. Fidelity sought to combat this by naming Brian Chang as co-manager to the strategy in 2019. Chang rose to portfolio management from Fidelity’s high-yield research ranks, and his partnership with Notkin helps to ease concerns around the strategy’s long-term succession planning. While Notkin and Chang’s assessments of relative value across asset classes are critical, they also benefit from topnotch fundamental research from the firm’s Boston-based high-yield and equity research teams.

The strategy stands out among even the most aggressive in the high-yield bond Morningstar Category for its hefty equity stake. Notkin makes full use of his 22% cap on equities during periods when he believes the yield premium of high-yield bonds over stocks (the latter of which is estimated using earnings yields of broad-based market indexes like the S&P 500) to be insufficient.

Meanwhile, only a select few high-yield managers allocate even 1% to equities. Risk mitigation is paramount here, given the strategy’s ability to allocate to common stock. When dialing up equity exposure, Notkin and Chang will often take down the bond sleeve’s credit risk and raise cash. Though prudent, that doesn’t prevent fundholders from being subjected to extreme volatility when the equity markets see-saw as they have in 2025.

—Max Curtin, analyst

Franklin High Income Fund

• Morningstar Medalist Rating: Bronze
• Morningstar Rating: ★★★★★

This $2.8 billion fund has gained 7.90% over the past year, while the average fund in its category is up 6.68%. The Franklin Templeton fund, launched in May 2013, has climbed 10.04% over the past three years and 5.29% over the past five.

In high-yield investing, where credit research fundamentally drives returns, human capital forms an integral part of the investment process. The recently completed acquisition of Putnam and the selective integration of the fixed-income team have strengthened this crucial aspect, with 20 corporate credit analysts now covering fewer issuers each, enabling more thorough fundamental analysis. Lead manager Glenn Voyles, who has capably steered the fund since 2016, works alongside seasoned colleagues Patricia O’Connor, James McGiveran, and Bryant Dieffenbacher to harness this expanded research capability. The process improvements are most evident in how the team leverages its deeper research resources for sector positioning and credit selection.

The team’s fundamental approach centers on intensive issuer analysis, examining balance sheets, cash flows, and long-term business prospects to identify relative-value opportunities. Macro is not much of the investment process, which generally is a positive, apart from some fairly commonsense biases, such as avoidance of sectors or industries in secular decline (for example, retail, telecom). While the fund struggled in 2014-15 owing to overly bold energy calls, it has managed to avoid similar sector-level missteps since.

The approach has proved effective even before the full impact of the Putnam team’s arrival had a chance to make itself felt. The fund held up better than most peers amid 2020’s coronavirus volatility and again during 2022’s tumultuous markets, thanks to successful security selection and a shorter duration stance. Defaults are an unavoidable part of managing a high-yield portfolio, but over the past few years, there were only a handful of issues in the portfolio, which subsequently defaulted. Accordingly, through December 2024, the R6 share class’s 4.7% annualized return over the past five years beat 80% of distinct share class peers; since Voyles took over as lead manager in March 2016, the fund’s returns beat 70% of the peers.

—Maciej Kowara, principal