Hopeful on High-Yield Bonds

Weighing in on the cautious side is Morningstar high-yield analyst Scott Barry, who says investors should be especially careful this year because "after two strong years in a row, much of the capital appreciation potential has been wrung out of the market, and if defaults rise, then investors might not even see the full coupon."

Barry's top high-yield fund choices are (NTHEX)Northeast Advisors because its selections are "issue specific as opposed to market specific" and (VWEHX)Vanguard High-Yield Corporate, due to its low volatility and low expense ratio of 23 basis points. The average expense ratio for a high-yield fund is 1.31%, according to Morningstar.

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