Junk-Bond Funds Get Trashed

Pax World High Yield seeks to minimize the carnage by focusing on high quality.

It's been a rotten time to be in high-yield bonds, too. Junk bonds suffered their worst month on record in September, falling 8.3% as investors purged their portfolios of debt connected to firms with poor credit ratings.

The drop dragged down even those funds that hold mostly better grades of junk bonds, including Pax World High Yield (symbol PAXHX). The fund, which invests only in companies that pass certain social and environmental screens, got a lift, relative to its peers, by largely avoiding bonds rated triple C and lower.

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Elizabeth Leary
Contributing Editor, Kiplinger's Personal Finance
Elizabeth Leary (née Ody) first joined Kiplinger in 2006 as a reporter, and has held various positions on staff and as a contributor in the years since. Her writing has also appeared in Barron's, BloombergBusinessweek, The Washington Post and other outlets.