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5 Buy-Ranked High-Yield Bond Mutual Funds

For the average investor, high-yield bond mutual funds are a great method to invest in bonds rated below investment-grade, popularly known as junk bonds. This is because these funds hold a wide range of such securities, significantly reducing the portfolio risk. In addition, these funds provide better returns than investments with higher ratings, including government and corporate bonds. Further, because the yield from such bonds is higher than investment-grade securities, these investments are less susceptible to interest rate fluctuations. Below we will share with you 5 buy-rated high yield bond mutual funds. Each has earned either a Zacks Mutual Fund Rank #1 (Strong Buy) or a Zacks Mutual Fund Rank #2 (Buy) , as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all high-yield bond funds, investors can click here . Lord Abbett Bond Debenture Fund A (MUTF: LBNDX ) invests a large chunk of its assets in fixed-income securities, including bonds and debentures. LBNDX may invest a significant share of its assets in junk bonds that are believed to provide a high return. It invests in high-yield securities that are ranked below BB/Ba. The Lord Abbett Bond-Debenture Fund A has a three-year annualized return of 7.2%. LBNDX has an expense ratio of 0.86%, compared to a category average of 1.07%. Wells Fargo Advantage Short-Term High Yield Bond Fund Investor (MUTF: STHBX ) seeks total return through high current income and capital growth. It invests a major portion of its assets corporate debt securities that are rated below investment-grade. STHBX may also invest a maximum of one-fourth of its assets in non-US securities that are denominated in the US dollar. The fund invests in securities that include corporate bonds and bank loans having fixed, floating or variable rates. The Wells Fargo Advantage Short-Term High-Yield Bond Investor fund has a three-year annualized return of 3.1%. As of May 2015, STHBX held 165 issues, with 1.47% of its total assets invested in Cit Grp 4.25%. Fidelity Advisor High Income Fund A (MUTF: FHIAX ) invests in income-generating securities, including debt securities, preferred stocks and convertible securities, with a primary focus on below-investment grade securities. It may also invest in defaulted securities and common stocks. In addition, FHIAX invests in firms that are going through a tough time. Factors such as financial strength and economic condition are considered before investing in a security throughout the globe. Matthew Conti is the fund manager, and he has managed FHIAX since 2001. Transamerica Partners High Yield Bond Fund Inv (MUTF: DVHYX ) seeks high current income. It mainly invests in underlying funds. DVHYX invests majority of its assets in bonds that are expected to provide a high return. The fund has a three-year annualized return of 6.2%. DVHYX has an expense ratio of 0.58%, compared to a category average of 1.07%. City National Rochdale High-Yield Bond Fund Servicing (MUTF: CHYIX ) invests a lion’s share of its assets in below-investment grade securities that are believed to produce fixed income, commonly known as “junk bonds.” The fund invests in securities, including corporate bonds and debentures, convertible securities, preferred securities and debt securities. CHYIX invests in securities that are issued by both US and non-US entities. As of March 2015, CHYIX held 179 issues, with 2.04% of its total assets invested in Central Garden & Pet 8.25%. Original Post

Inside The Crash In China ETFs

China was hot and soaring among all stock markets across the globe for the most of this year thanks to rounds of ultra-easing policies. In fact, China was leading the global markets, attaining the best performing country spot for the first half. But the incredible run was washed away over the past few weeks as concerns brew over the longevity of the stimulus-driven rally and the real health of the economy. Further, worries over lofty valuations raised a panic alarm among investors after a one-year stupendous rally. What Let the Dragon Out Several factors led to horrendous trading in China. First, more than 40% of the mainland China companies halted trading in their shares, locking in up $2.6 trillion worth of shares. This is touted to be the largest wave of trading halts in the history of the Chinese equity market. Additionally, the world’s second largest economy is faltering with slower growth in six years, credit crunch, a property market slump, weak domestic demand, lower industrial production, and lower factory output. Corporate profits are also lower than a year ago. Further, a slew of recent measures including fresh interest-rate cuts, stock purchases by state-directed funds, looser margin-financing rules, central bank pledge of liquidity support, and suspension of new listings are not helping in any way to boost investors’ confidence. Lastly, deepening Greece crisis and Grexit fears shook investors across the globe, a creating risk-off trading environment. The combination of factors led to a dragonish sell-off in the Chinese market. The Shanghai Composite Index plunged over 8% in today’s session, extending its steepest three-week decline since 1992. With this, the index tumbled 32% since its peak in June 12 and wiped out more than $3.5 trillion in market capitalization. On the other hand, Hong Kong’s Hang Seng Index plunged as much as 8.6% on the day, making the biggest drop since November 2008. ETF Impact Quite expectedly, the terrible trading has been felt in the Chinese ETF world too. Funds in this space also saw big losses over the past one month, putting an end to their winning streaks, and landing them in the bear territory. China ETFs Performance Market Vectors China SME-ChiNext ETF (NYSEARCA: CNXT ) -43.54% db X-trackers Harvest CSI 500 China-A Shares Small Cap Fund (NYSEARCA: ASHS ) -43.49% iShares MSCI China Small-Cap ETF (NYSEARCA: ECNS ) -29.14% Guggenheim China Small Cap ETF (NYSEARCA: HAO ) -25.24% First Trust China AlphaDEX Fund (NYSEARCA: FCA ) -17.27% SPDR S&P China ETF (NYSEARCA: GXC ) -16.38% iShares FTSE China ETF (NASDAQ: FCHI ) -16.14% iShares MSCI China Index Fund (NYSEARCA: MCHI ) -15.57% iShares China Large-Cap ETF (NYSEARCA: FXI ) -15.08% PowerShares Golden Dragon China Portfolio (NYSEARCA: PGJ ) -13.92% From the above table, it should be noted that steep declines were widespread among the Chinese ETFs. Interestingly, A-shares ETFs have been the worst performers of the Chinese rout, followed by small caps. Large-cap focused funds and the broad market funds too saw double-digit declines over the past four weeks. Further, ETFs targeting specific sectors like Global X China Industrials ETF (NYSEARCA: CHII ), Global X China Materials ETF (NYSEARCA: CHIM ), Guggenheim China Technology ETF (NYSEARCA: CQQQ ), Global X China Financials ETF (NYSEARCA: CHIX ) and Global X China Consumer ETF (NYSEARCA: CHIQ ) also bore the brunt, declining 27.46%, 25.26%, 21.25%, 16.32% and 13.71% respectively. What Lies Ahead? Given the steep decline in all the corners of Chinese space and huge numbers of trading halts, fears are largely building up in the space. Morgan Stanley ‘s head analyst of emerging markets and global macro economy views this as the biggest bubble in the last 20-30 years, while others are anticipating that China’s market turmoil might be a bigger issue than the Greece crisis. It is not only destabilizing the economy but could also have ripple effects in the global markets if it continues for long. However, the stepped-up measures taken by the government lately will soon start to pay off providing a boost to the stocks. In addition, easy cheap money flows in contrast to tightening policy in the U.S. will allow Chinese ETFs to resume their impressive ascent. Further, continued selling has made the Chinese stocks inexpensive at current levels. This is especially true given the Shanghai Composite Index and Hang Seng Index have a P/E ratio of 18.91 and 9.7, respectively, compared to 21.3 for the S&P 500 index. So investors should wait until the Chinese market bottoms out and then cash in on the opportunity of the beaten down prices with any of the above-mentioned ETFs having a favorable Zacks Rank of 2 (Buy) or 3 (Hold). Original Post

Great ETF Picks For 2nd Half Of 2015

The global stock market ended the first half of the year in the green amid bouts of volatility and uncertainty. Though U.S. stocks, as represented by the S&P 500 index, have recorded their worst performance in five years, foreign investing took the credit. All the thanks go to ultra-easing policies across the globe in stark contrast to the U.S. Policy easing has however not helped to reduce volatility, which at the moment seems to be the only constant factor. The markets are grappling with the dire issue of unpaid debts in Greece and Puerto Rico, as well as the looming stock bubble in China. The developments in these areas will continue to unnerve investors as the second half unravels. There is the additional uncertainty of interest rate hike in the U.S. while a strong dollar will continue to play foul in the global financial world (read: ETF Strategies for 2H ). This is especially true as the U.S. economy has been on a moderate growth path as reflected in increased consumer confidence, higher spending power, renewed optimism in housing recovery and an improving job market. Meanwhile, waves of merger and acquisition deals will continue to brighten up the stock world. However, any downbeat data, including disappointing job growth, no wage increase, lower inflation, and less manufacturing and industrial activity, could delay rate hike or bring in more volatility. That being said, it seems that the second half will most likely resemble the first, extending the winning streak of the top performing ETFs of 1H. In fact, most of these ETFs have a top Zacks ETF Rank of 1 or “Strong Buy”, suggesting their continued outperformance for the rest of the year (read: Top Performing ETF Areas of 1H ). Below, we have highlighted some excellent ETF picks from three different categories given that there will be no major shift in fundamentals in the coming months. These funds should lead to big gains for investors and are worth a closer look heading into the second half. U.S. Sector ETFs Healthcare has been the soaring corner of the broad U.S. market so far this year, and this trend is likely to continue given the M&A boom, strong earnings growth, cost-cutting efforts, aging population and Obamacare. Combined with attractive fundamentals, the sector provides a defensive tilt to the portfolio due to its non-cyclical nature unaffected by global turmoil (read: 3 Buy-Ranked ETFs for a Healthy Portfolio ). Investor should focus on the iShares U.S. Healthcare Providers ETF (NYSEARCA: IHF ), which looks to offer exposure to the companies that provide health insurance, diagnostics and specialized treatment. Another alternative could be a small-cap play on the broader sector through the PowerShares S&P SmallCap Health Care Portfolio ETF (NASDAQ: PSCH ). Both funds gained 20.4% and 18.5%, respectively, so far this year. U.S. Style-Box ETFs 2015 is the year of growth as Americans are brimming with confidence instilled by their fat wallets and rising income. In particular, the small-cap space will likely be the major beneficiary of this trend as pint-sized stocks are closely tied to the U.S. economy and generate most of their revenues from the domestic market. This makes them safer bets than their large and mid-cap counterparts during a global turmoil. The Guggenheim S&P SmallCap 600 Pure Growth ETF (NYSEARCA: RZG ), which gained nearly 11% in the year-to-date frame, looks to be a compelling choice for the rest of the year. Global ETFs Global investing has been in vogue this year, reversing the past three-year trend. Though many developed and developing economies are still struggling with slower growth, Europe and Japan remained the bright spots and are gaining a lot of attention from investors this year. The iShares Currency Hedged MSCI Japan ETF (NYSEARCA: HEWJ ) and the WisdomTree Europe Hedged Equity ETF (NYSEARCA: HEDJ ) are the two popular picks in the broad Japanese and European stock markets. Both funds provide hedge against any fall in their respective currencies – yen and euro – which have been badly hammered. Moreover, rising concerns over Grexit have depressed many European ETFs in recent weeks, providing a solid entry point. HEWJ and HEDJ are up 17.6% and 10.5%, respectively, so far this year. In the developing world, China ETFs have been performing amazingly and are still on top at the midway mark, but it has been entering the bear market lately, dulling the appeal for Chinese products. On the other hand, the Indian economy has regained its strong momentum lately, after losing its shine this year. If this trend persists, the EGShares India Consumer ETF (NYSEARCA: INCO ) could be the best way to go. The fund added nearly 8% in the year-to-date time frame. Original post