Mutual Fund Basics
High-yield bonds are issued by companies with a relatively high degree of credit risk, but that doesn’t mean they should always be avoided. Depending on your appetite for risk, these bonds can offer potentially attractive returns, as well as significant diversification benefits.
Investor appetite for high-yield bonds has grown substantially over the past few years. Total existing debt in the U.S. high-yield market stands at about $1.3 trillion. High-yield bonds are rated below BBB by Standard & Poor’s and below Baa by Moody’s. Lower rated bonds may carry more risk.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
Bond ratings, which typically range from AAA/Aaa (highest) to D (lowest), are assigned by credit rating agencies such as Standard & Poor's, Moody's and/or Fitch, as an indication of an issuer's creditworthiness.