Summary: The Delaware High Yield Opportunities Fund (DHOIX) provides outsized returns by taking outsized risks.
Commentary: This is one of the riskier high yield bond funds out there, however presumably you are not investing in a high yield bond fund because you want low risk. What investors have gotten in return for the extra risk the Delaware High-Yield Opportunities Fund takes is one of the top performing high yield bond funds out there. The fund is one of the top 10 best performing high yield bond funds for the last 1, 5, and 10 year time periods. The fund also still has less than $1 Billion under management, allowing it to take advantage of opportunities that larger high yield funds may not be able to.
Before investing in the Delaware High-Yield Opportunities Fund, it is important to understand that the primary goal of this fund is Total Return. If you are looking for a fund to provide you with a high level of income in the form of dividend distributions than you are likely to be disappointed. The fund currently yields around 5.4% which about 1% less than what you can earn currently in a high yield index fund. At the end of the day however, what matters is how much money the fund generates in total (appreciation and income) which is why we love the Delaware High-Yield Opportunities Fund.
Short-Term Performance: Excellent Over the last 12 months, the Delaware High-Yield Opportunities outperformed the average high yield bond fund by 3.96%. Over the last 3 years it outperformed by 1.61% per year on average.
Long-Term Performance: Excellent The fund has outperformed its competitors over the last 5 and 10 year time frames. Over the last 5 years, it outperformed the average high yield bond fund by 1.42% per year on average. Over the last 10 years it out performed by 1.88% per year on average.
Returns Relative to Risk: Good The credit risk of the bonds the Delaware High-Yield Opportunities Fund invests is high, even for the high yield bond fund category. However, with high yield it is all about the return that you are getting for the risk. While it has sometimes been a rocky ride, historically the fund’s investors have been handsomely rewarded for the extra risk it takes.
Fees: Good. No Sales load and .81% yearly expense ratio. Make sure you are buying the DHOIX, as there are other share classes of this fund that have a load fee. You can learn more about mutual fund fees here.
Manager Tenure: Good. Portfolio Manager Kevin Loome has managed the Delaware High-Yield Opportunities fund since 2007.