Is now a good time to invest in junk bonds? If so, who has the best junk? Will we find it in corporations, municipalities or overseas?
The short answer is that, if you own the right mutual funds — and if you are patient and don’t mind taking some additional risk — any time can be a good time buy junk bonds. That said, if you buy the wrong fund at the wrong time, your junk bonds might be … well, junk.
In different words, not all junk is created equal. So let’s separate the trash from the treasure!
If you’ve ever seriously studied the world of fixed income, you know that bonds can be much more complex, and therefore more challenging, than that of equities. And, if you are like me, you humbly stepped away from trying to pick the best bonds and spent your time trying to pick the best bond managers instead. The wise investor always learns when to outsource the security selection over to someone else!
Therefore, when it comes to buying junk, you need to hire someone (or a team) that can sift through the piles of junk-bond trash to pull out the junk-bond treasures. With this in mind, I present you with the following three mutual funds: