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Mainstay High Yield Fund Cashes in on Junk Corporate Bonds

Despite low performance, junk bonds provide big yield


The Mainstay High Yield Opportunities Class C Fund (MUTF: MYHYX) is an IRA fund on the hunt for current income by investing in high-yield domestic and foreign corporate junk bonds. It generally holds long positions, equal to approximately 140% of net assets and short positions, equal to approximately 40% of net assets.

Here are the specifics for the Mainstay High Yield Opportunities Class C Fund for today’s mutual fund spotlight:

Investing Strategy: The fund usually takes long and short positions, either directly or  indirectly through derivatives. Proceeds from the short positions typically are used to purchase all or a portion of the additional long positions. Some 86% of the fund’s assets are in bonds, 8% is in cash and about 3.5% are in common and preferred stocks.

Expense Ratio: With a 2.09% expense ratio and 1% deferred load, the fund is expensive, but has a Morningstar Rating of five stars.

Top 5 Holdings: The top stocks in the Mainstay High Yield Opportunities Class C Fund include Ally Financial 144A 7.5% yield corporate bonds at 2.0% of the portfolio, U.S. Treasury Notes with a 1.25% at 1.37% of the portfolio, Cit Group 7% yield corporate bonds at 1.23% of holdings, GMAC  8% bonds at 1.05%, U.S. auto maker Ford Motor Co (NYSE: F) at 1.04%

Returns: The Mainstay High Yield Opportunities Class Fund was established in December 2007. Its 12-month return of 4.62% underperformed the broader market’s 17% during the period.

Other Fund Statistics

  • Total Assets: $1.10 billion (as of 6/27/11)
  • Minimum Investment: $1,000
  • Fund manager: Taylor Wagenseil, Dan Roberts, Louis Cohen and Michael Kimble)
  • Manager’s Tenure: All since December 2007

Article printed from InvestorPlace Media,

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