Improving U.S. economic conditions and the strengthening of the dollar resulted in higher interest rates in the last six months. The yield on the long-term Treasury bonds is slightly above 3% now:
As the consequence, bond funds investing in Treasuries did not perform well in the same period:
On the other hand, investors who were willing to take higher risks in search for higher income have been well rewarded.
For example, the Fidelity High Income Fund (SPHIX) invests in corporate bonds and it offers both a respectable 5.28% yield and the potential for strong appreciation of its Net Asset Value, should the U.S. economy continue to grow in 2017:
Another example is the Fidelity Real Estate Income Fund (FRIFX) with a current yield of 4.16%:
Investors who are interested in diversifying into international assets can also consider the Fidelity New Markets Income Fund (FNMIX) with a current yield of 5.42%. FNMIX holds the majority of its assets in debt securities of emerging market companies.