High Yield Set Up for a Strong Second Half

High yield bonds bounced back in the first half of 2016 after the drop in oil prices sank the sector last year. Andrew Toburen, portfolio manager for the Chartwell Short Duration High Yield Fund (CWFIX), said junk bonds should continue to fare well in the second half of the year as interest rates remain low and the economy grows slowly. 'Energy defaults will remain elevated, but it's already priced into the market,' said Toburen, adding that high yield bond valuations are still attractive even after the recent run-up. The Chartwell Short Duration High Yield Fund is up 3.3 percent thus far in 2016, according to Morningstar. The $20.1 million fund is down 1.3 percent in the past 12 months, outpacing 62 percent of its rivals in Morningstar's high yield category. The fund sports a trailing twelve month yield of 3.3 percent, according to Morningstar. One high yield issuer Toburen is especially positive on is Frontier Communications (FTR) - Get Report . The telecom giant recently picked up assets from Verizon (VZ) - Get Report in California, Florida and Texas that throw off a lot of cash. Toburen expects the company to use that cash flow to improve its credit profile.