High-yield bond funds are likely to return to normal levels well below the 18-year highs that monthly yields have commanded for the past few months, reported the Wall Street Journal’s Sam Mamudi in Tuesday’s Fund Track column. Mamudi noted that monthly yields have steadily declined since February, as the concern over high default rates waned.

Investors have had returns averaging 20 percent the past year, with even some high-yield bond funds up 26 percent for the first half of the year. Although these high numbers are predicted to decrease and level out, high-yield managers however maintain that yields could rise again in the next few months as institutional investors opt to cash in their gains and the economic recovery continues to strain the market.

Tuesday’s column quoted managers Fred Hoff of Fidelity High Income Fund and Bill Eigen of J.P Morgan Strategic Income Opportunities Fund, as well as Jeff Tjornehog, senior research analyst at Lipper, and Lawrence Jones, senior mutual fund analyst at Morningstar. 

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