Kemper Funds has introduced a new junk bond mutual fund that will seek a high level of current income with capital gains as a secondary objective.

Kemper High Yield Fund II will invest mainly in high-yield bonds and will be managed to have a higher yield than Kemper's older High Yield Fund.

The management team for the two funds is substantially the same.

Recent flows into junk bond funds made the time right to roll out the new one, Kemper said this month when it announced the new product.

High Yield II aims to maintain at least 90% of its assets in high-yield bonds, with a 65% minimum.

But fund managers may also invest up to 20% of the assets in equities, which industry watchers said might let the managers boost performance when the stock market is especially lucrative.

The fund has further flexibility to boost performance in that it also may leverage up to 20% of its total assets, including the amount borrowed.

Kemper said it does not anticipate using the leverage under normal market conditions.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.