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The High Road

With recent returns of 99 percent, this high-yield fund deserves a closer look.

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This story appears in the December 1997 issue of Entrepreneur. Subscribe »

There have been times when scarcely anyone has had a good word to say about high-yield bonds. They've suffered badly in recessions or when interest rates rose fast--or simply when investors lost confidence. They're the bonds of companies whose prospects of meeting their debt obligations are rated lower than those of the leading companies. Bad news about them, their industry or the economy can throw those prospects into question.

In recent years, however, their top performance has confounded critics. For example, Northeast Investors Trust, the bond fund listed by Morningstar as the one with the best performance in the five years ending June 30, 1997, had a total return in that time of 99 percent. "High-yield bonds are a superior asset class," says Ernest Monrad, who manages the fund with his son Bruce.

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