Maximum Income: 7 Best High-Yield Bond Funds to Buy Now 2025

Introduction:

If you’re an investor looking to earn more income from your money, high-yield bonds can be an attractive Option. But before diving in, it’s important to understand what they are and the risks involved.

Most conservative investors stick to U.S. Treasury bonds or highly rated corporate bonds. These are considered “investment-grade” meaning the companies or governments behind them are financially strong and likely to repay their debts on time. In return, you usually get modest interest payments—safe, but not very exciting.

On the other hand, high-yield bonds—also known as junk bonds—are issued by companies with lower credit ratings. These companies might have weaker balance sheets, more debt, or uncertain Earnings. Because there’s a bigger chance they could miss a payment or default, they pay higher interest rates to attract investors.

These higher returns come with more risk. However, when you invest in bond funds or ETFs that spread your money across many different companies, you can reduce the chance of one bad bond sinking your entire investment.

Michael Wagner, a financial expert, says regular investors should use mutual funds or ETFs to invest in high-yield bonds. “It’s hard to research these bonds on your own, like a bank would,” he explains.
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Summary

1. Vanguard High-Yield Corporate Fund (VWEHX)
2. Fidelity Short Duration High Income Fund (FSAHX)
3. Schwab High Yield Bond ETF (SCYB)
4. Invesco Senior Loan ETF (BKLN)
5. Invesco AAA CLO Floating Rate Note ETF (ICLO)
6. BondBloxx CCC Rated USD High Yield Corporate Bond ETF (XCCC)
7. Xtrackers High Beta High Yield Bond ETF (HYUP)

1. Vanguard High-Yield Corporate Fund (VWEHX)

• Expense Ratio: 0.22%
• 30-Day SEC Yield: 6.2%
• Minimum Investment: $3,000

VWEHX is a popular high-yield bond mutual fund from Vanguard. It actively invests in a wide range of corporate bonds with lower credit ratings—mostly in the B and BB range. These bonds pay higher interest because they carry more risk.

The fund offers a solid yield of 6.2%, which can be appealing if you’re looking to boost your income. One thing to note: this fund may not be very tax-efficient. If you hold it in a taxable account, you could owe taxes on interest income each year.

For larger investors, Vanguard offers Admiral Shares (ticker: VWEAX) with a lower expense ratio of 0.12%, but you’ll need to invest at least $50,000.

2. Fidelity Short Duration High Income Fund (FSAHX)

• Expense Ratio: 0.71%
• 30-Day SEC Yield: 6.6%
• Minimum Investment: None on Fidelity’s platform

FSAHX is designed for investors who want higher returns than regular bonds, but less sensitivity to interest rate changes. It mainly invests in bonds with shorter maturities—on average, three years or less.

The fund includes BB- and B-rated bonds, floating-rate loans, foreign bonds, and even some defaulted bonds (if there’s a chance of recovery). This mix helps it stay flexible.

Its current 6.6% yield is attractive, although the expense ratio is a bit high at 0.71%. Still, there’s no minimum investment if you buy through Fidelity, making it accessible to all types of investors.

This fund is good for those who want higher income but are concerned about rising interest rates affecting bond prices.

3. Schwab High Yield Bond ETF (SCYB)

• Expense Ratio: 0.03%
• 30-Day SEC Yield: 7.3%

SCYB is a very low-cost ETF that tracks a large index of high-yield corporate bonds. Its expense ratio of just 0.03% makes it one of the cheapest bond funds available.

The fund holds over 1,800 high-yield bonds, mostly with 3–7 year maturities and credit ratings between B and BB. That means the bonds are risky, but not at the extreme end of the junk bond scale.

With a 7.3% yield, SCYB offers strong income for very little cost. It’s a great choice for long-term investors who want steady income without paying high fees. Since it’s passively managed, there’s no active fund manager making buying or selling decisions—just tracking the index.

4. Invesco Senior Loan ETF (BKLN)

• Expense Ratio: 0.65%
• 30-Day SEC Yield: 6.7%

BKLN is a unique type of high-yield bond fund. It doesn’t invest in traditional bonds but in senior loans (also called bank loans or leveraged loans). These are loans to riskier companies but with a key difference—they’re secured with collateral and sit higher in the repayment line.

Because they’re floating-rate loans, they adjust with interest rates. That makes BKLN a smart pick during rising rate environments.

BKLN tracks an index of 100 top leveraged loans and currently pays a 6.7% yield. It’s also the largest and most liquid ETF in this space, with over $6.7 billion in assets.

If you want high income and protection from rising rates, BKLN is worth a look.

5. Invesco AAA CLO Floating Rate Note ETF (ICLO)

• Expense Ratio: 0.20%
• 30-Day SEC Yield: 5.6%

ICLO invests in AAA-rated tranches of CLOs (Collateralized Loan Obligations). CLOs are bundles of loans grouped together and sold to investors in pieces, or “tranches,” based on risk.

The AAA tranche is the safest part, with the highest credit rating and first priority for repayment. This makes ICLO much safer than typical junk bond funds, though its 5.6% yield is a bit lower.

If you want income with lower risk, ICLO is a smart way to gain exposure to the loan market without diving into the riskier pieces.

6. BondBloxx CCC Rated USD High Yield Corporate Bond ETF (XCCC)

• Expense Ratio: 0.40%
• 30-Day SEC Yield: 11.5%

XCCC focuses on the riskiest part of the high-yield market: CCC-rated bonds. These are the lowest-rated bonds that are still paying interest, and they come with a high chance of default.

To compensate, XCCC pays a huge 11.5% yield. But this extra income comes with more volatility and more potential for losses.

The ETF limits any one company to 2% of the fund, and it spreads its investments across many industries. This helps reduce the risk that a single company default will hurt your returns too much.

For investors who understand the risk and want big potential income, XCCC could be a bold (and rewarding) move.

7. Xtrackers High Beta High Yield Bond ETF (HYUP)

• 30-Day SEC Yield: 8.6%

HYUP invests in higher-risk, higher-return junk bonds. It follows an index that targets companies with more volatile bonds, which leads to a higher yield of 8.6%.

It owns over 600 bonds, providing good diversification, and it pays interest monthly like many other bond ETFs.

This fund is good for investors who want to take a more aggressive approach within the high-yield bond space and believe those higher-risk companies will do well.

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Frequently Asked Questions

Q.1: Are high-yield bonds risky?
A.1: Yes, they carry a higher chance that the issuer may not repay their debts. But investing through diversified funds or ETFs helps reduce that risk.

Q.2: Should I buy high-yield bonds directly or through funds?
A.2: Most experts recommend funds or ETFs. It’s difficult for individuals to analyze risky companies on their own.

Q.3: Are high-yield bond funds good in a rising interest rate environment?
A.3: Some, like BKLN or ICLO, hold floating-rate loans, which can perform better when rates rise.

Q.4: Are these funds suitable for long-term investing?
A.4: Yes, especially when used to balance a broader portfolio. But always consider your risk tolerance.

Q.5: Do I need a lot of money to invest?
A.5: Not necessarily. Some ETFs and mutual funds have no minimum investment if bought through specific brokers.

Conclusion

High-yield bonds can be a smart way to boost your income—but they’re not for everyone. If you’re willing to take on more risk, these seven bond funds offer a variety of ways to tap into higher returns. Whether you prefer short durations, floating rates, or bold plays in lower-rated bonds, there’s likely a fund here that fits your needs.

Start small, do your homework, and think of these funds as one part of a well-diversified investment plan.

Important Note: Please Read Before You Invest

We're just sharing some helpful tips, but remember, investing comes with risks. We can't promise that these tips will always work or that you'll make money. Everyone's financial situation is different, so it's smart to do your research or talk to a financial advisor before you invest. Using these tips, you agree that you're responsible for your investment decisions and results.