Poor Performing High-Yield Bond Funds Investigation

Brokers May Have Downplayed The Risks of Junk High-Yield Bond Funds

Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) is offering free initial case consultations to investors of the following high-yield bond funds, also known as junk bond funds.

High-yield bond funds tend to have lower-quality bonds. Their portfolios usually include high-income debt securities in which at least 65% of bond assets are unrated or rated poorly at the BB level or lower. While junk-bond funds offer higher yields than other portfolios, they are also more vulnerable to the economy, credit risks, and other adverse events.

Not only that but there is the chance of default or the probability that one of the credit rating agencies will continue to downgrade a junk bond and cause its value to drop even further in price.

The Worst High-Yield “Junk” Bonds for Investors

Here is a list of the worst junk bonds (and their total returns in mid-April 2022) that was published by Second Chair LLC Principal Chair Mark O. Conner:

HIGH-YIELD BOND FUNDS

WP Income Plus Fund; Institutional (-51.97%)
Western Asset SMASh Series Core Plus Completion Fd (-22.02%)
Pioneer Corporate High Yield Fund; Y (-16.09%)
AXS Sustainable Income Fund; I (-15.28%)
Muzinich US High Yield Credit Fund; SInst (-13.30%)

HIGH YIELD CLOSED-END BOND FUNDS

MFS Charter Income Trust (XNYS:MCR) (-19.01%)
Western Asset Gl Hi Inc. (XNYS: EHI) (-18.47%)
PGIM Short Duration High Yield Opportunities Fund (XNYS: SDHY) (-18.30%)
Western Asset Hi Inc. II (XNYS: HIX) (-16.49%)
First Trust HYO 2027 Trm (XNYS: FTHY) (-14.16%)

HIGH YIELD EXCHANGE-TRADED BOND FUNDS

High Yield ETF (ARCX:HYLD) (-12.85%)
Tidal: ATAC Credit Rot (ARCX: JOJO) (-11.58%)
Invesco GI ST HY Bd (ARCX: PGHY) (-10.31%)
Xtrackers JPM ESG HY CB (BATS:ESHY) (-9.84%)
Xtrackers Hi Beta Hi Yld (ARCX: HYUP) (-9.66%)

HIGH YIELD MUNICIPAL BOND FUNDS

PIMCO Total Return Fund; Institutional (-11.89%)
Principal Street High Income Municipal Fund; Inv (-10.85%)
Franklin High Yield Tax-Free Income Fund; A (-9.83%)
Invesco Rochester Municipal Opp Fund; A (-8.78%)
Northern High Yield Municipal Fund (-8.51%)

HIGH YIELD MUNICIPAL BOND ETFs

Rareview Tax Adv Inc (BATS:RTAI) (-12.82%)
VanEck: Muni Alloc (BATS:MAAX) (-10.74%)
Franklin ETF: Lib Fed TFB (ARCX:FLMB) (-10.57%)
SPDR Nuv Bbg Muni Bd (ARCX:TFI) (-10.05%)
Overlay Shs Muni Bd ETF (ARCX: OVM) (-9.54%)

HIGH YIELD MUNICIPAL BOND CLOSED-END FUNDS

Pioneer Municipal High Income Opportunities Fund, Inc. (XNYS: MIO) (-28.47%)
Pioneer Muni High Income (XNYS: MHI) (-19.53%)
MFS High Inc Muni (XNYS: CXE) (-19.08%)
Pioneer Mu Hi Inc Advt (XNYS: MAV) (-19.07%)
MFS High Yld Muni (XNYS:CMU) (-16.78%)

Why Some Financial Advisors May Unsuitably Recommend Junk High-Yield Bond Funds

Unfortunately, some brokers continue to market and sell high-yield bond funds even when they are unsuitable for the customer. One reason for this is the high commissions and fees a financial advisor can earn.

For example, some brokers have been known to claim that they or the fund manager will be able to manage the risks to the client. This is practically impossible. Or, to get an investor on board, a broker might tout a high-yield bond fund’s modest yield increase while minimizing the risks. Older conservative investors and most retirees especially should stay away from high-yield bond funds.

Seasoned High-Yield Bond Fund Attorneys

Our knowledgeable high-yield bond fund lawyers have decades of experience helping investors recover damages from their broker-dealers that sold them these risky products. If you suffered losses in any of the high-yield bond funds listed above or any other junk bond fund, please contact us at SSEK Law Firm at (800) 259-9010.