Voya High Yield Bond Fund Quarterly Commentary - 2Q26
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Voya High Yield Bond Fund Quarterly Commentary - 2Q26

Key Takeaways

High-yield (HY) bonds advanced in the second quarter as geopolitical tensions eased, helping stabilize energy prices and temper macro uncertainty. 

For the period, the class I shares of the Fund underperformed with its benchmark on a net asset value (NAV) basis.

Yielding more than 7%, the asset class offers equity-like returns but with less volatility.

Total return approach, investing in below investment grade corporate securities.

Portfolio review

HY bonds advanced in the second quarter as geopolitical tensions eased, helping stabilize energy prices and temper macro uncertainty. Corporate results during the period were strong, with the S&P 500 delivering its highest earnings growth and surprise rates since 2021, supported by robust capital expenditure and strong hyperscaler demand. On the economic front, employment was steady and the manufacturing sector expanded alongside the services sector, while inflation accelerated and consumer confidence remained subdued. The U.S. Federal Reserve left interest rates unchanged with new Fed Chair Kevin Warsh removing forward guidance and emphasizing price stability at the June Federal Open Market Committee (FOMC) meeting. Against this backdrop, the probability of a rate hike increased, and the 10-year U.S. Treasury yield rose. 

The ICE BofA US High Yield Index returned 2.46% for the quarter, bringing year to date performance to 1.89%. BB, B, and CCC rated bonds returned 2.23%, 2.84%, and 2.40%, respectively. Spreads narrowed to 275 basis points (bp) from 328 bp, the average bond price rose to 97.11, and the market’s yield fell to 7.45%. Most industries finished higher with packaging and paper, services, and real estate outperforming, while cable, transportation, and energy underperformed. Trailing 12-month default rates finished the period at 2.67% (par) and 1.76% (issues). The upgrade and downgrade ratio increased to 1.1. Quarterly new issuance saw 125 issues priced, raising $106.0 billion in proceeds. Mutual fund flows were estimated at $8.9 billion. 

For the quarter, the class I shares of the Fund underperformed with its benchmark on a NAV basis. The portfolio’s overweight to B rated bonds (which outperformed BB and CCC rated bonds) and allocation to convertible securities were favorable tailwinds in the period. Industries helping relative performance in the period included cable & satellite TV, technology & electronics, and media. Security selection was the main source of strength across all relative contributors. A lack of exposure to a cable television issuer that announced an internal reorganization had the largest positive impact in cable & satellite TV. Positioning in a cloud computing issuer that announced a key strategic partnership drove outperformance in technology. Within media, gains were largely attributable to overweight positioning in a social media company that announced cost-cutting measures. Industries detracting the most from relative performance in the period were healthcare, telecommunications, and support-services. Overweight positioning in a health services provider, along with underweight positioning in a pharmaceutical developer, were the primary adverse impacts in healthcare. Within telecommunications, an allocation to a diversified telecom provider had the largest negative effect on performance. An overweight in an equipment rental issuer that offered conservative guidance was the primary source of relative underperformance in support-services.

Current strategy and outlook

The economic outlook is positive for the second half of 2026, supported by the artificial intelligence buildout, high-income consumer, and downstream effects of pro-growth domestic policies as well as sustained labor market stability and easing geopolitical tensions. Conversely, persistent inflation would be a key economic risk. 

The earnings outlook is also positive. Bottom-up estimates continue to trend higher, driven by better-than-expected results, earnings breadth expansion, robust AI spend, broadening investment, productivity gains, and durable margins. On the other hand, rising expenses and input costs are profitability headwinds. 

The United States HY market, yielding more than 7%1, offers equity-like returns but with less volatility. The asset class is expected to deliver a positive, but below-coupon return for 2026. The market’s attractive total return potential is a function of its discount to face value and higher coupon, which also serves to cushion downside volatility. Credit fundamental factors are stable, near-term refinancing obligations remain low, and the market’s credit quality composition has improved. In this environment, new issuance is expected to remain steady, spreads can stay tight, and the default rate should continue to reside below the historical average. 

Longer-duration issues are the most likely to be impacted by high and volatile rates, but the overall HY market should have a dampened response due to its larger coupon relative to other fixed income alternatives. As a result, U.S. HY bonds contribute from both a diversification and a relative-performance perspective, offering a very compelling yield opportunity.

Related Resources

Voya High Yield Bond Fund Fact Sheet

Related Products

Voya High Yield Bond Fund

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Source: ICE Data Services; data as of June 2026 

1Source: ICE Data Services; data as of June 2026 

The ICE Bank of America US High Yield Index tracks the performance of US dollar denominated below investment grade rated corporate debt publicly issued in the US domestic market. To qualify for inclusion in the index, securities must have a below investment grade rating and an investment grade rated country of risk. Index returns do not reflect fees, brokerage commissions, taxes or other expenses of investing. Investors cannot invest directly in an index. 

All investing involves risks of fluctuating prices and the uncertainties of rates of return and yield inherent in investing. You could lose money on your investment and any of the following risks, among others, could affect investment performance. The following principal risks are presented in alphabetical order which does not imply order of importance or likelihood: Bank Instruments; Company; Credit; Credit Default Swaps; Currency; Derivative Instruments; Environmental, Social, and Governance(Fixed Income); Foreign (Non-U.S.) Investments/ Developing and Emerging Markets; High-Yield Securities; Interest in Loans; Interest Rate; Liquidity; Market; Market Capitalization; Market Disruption and Geopolitical; Other Investment Companies; Preferred Stocks; Prepayment and Extension; Securities Lending; U.S. Government Securities and Obligations; Zero-Coupon Bonds and Pay-In-Kind Securities. Investors should consult the Fund’s Prospectus and Statement of Additional Information for a more detailed discussion of the Fund’s risks. 

The strategy is available as a mutual fund or variable portfolio. The mutual fund may be available to you as part of your employer sponsored retirement plan. There may be additional plan level fees resulting in personal performance that varies from stated performance. Please call your benefits office for more information. Variable annuities and group annuities are long-term investments designed for retirement purposes. If withdrawals are taken prior to age 59½, an IRS 10% premature distribution penalty tax may apply. Money taken from the annuity will be taxed as ordinary income in the year the money is distributed. An annuity does not provide any additional tax deferral benefit, as tax deferral is provided by the plan. Annuities may be subject to additional fees and expenses to which other tax-qualified funding vehicles may not be subject. However, an annuity does provide other features and benefits, such as lifetime income payments and death benefits, which may be valuable to you. All guarantees are based on the financial strength and claims paying ability of the issuing insurance company, who is solely responsible for all obligations under its policies. Insurance products, annuities and funding agreements issued by Voya Retirement Insurance and Annuity Company (“VRIAC”), One Orange Way, Windsor, CT 06095, which is solely responsible for meeting its obligations. Plan administrative services provided by VRIAC or Voya Institutional Plan Services, LLC(“VIPS”). Securities distributed by or offered through Voya Financial Partners, LLC (“VFP”) (member SIPC) or other broker-dealers with which it has a selling agreement. Only Voya Retirement Insurance and Annuity Company is admitted and can issue products in the state of New York. 

Credit quality is based on third-party agency ratings, ranging from AAA (highest) to D (lowest). If ratings are available from each of S&P, Moody's and Fitch, the security is assigned the median rating. If ratings are available from only two of these agencies, the lower rating is assigned. If a rating is available from only one of these three agencies, then that rating is used. If none of S&P, Moody's and Fitch rate the security but it has a Morningstar DBRS rating, then the Morningstar DBRS rating is used (see https://dbrs.morningstar.com/about/disclaimer). Any security that is not rated by these four agencies is placed in the Not Rated (NR) category. Ratings do not apply to the Fund itself or to the Fund shares. Ratings may not accurately reflect risk and are subject to change. 

This commentary has been prepared by Voya Investment Management for informational purposes. Nothing contained herein should be construed as (i) an offer to sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. Any opinions expressed herein reflect our judgment and are subject to change. Certain of the statements contained herein are statements of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (1) general economic conditions, (2) performance of financial markets, (3) interest rate levels, (4) increasing levels of loan defaults (5) changes in laws and regulations and (6) changes in the policies of governments and/or regulatory authorities. 

The opinions, views and information expressed in this commentary regarding holdings are subject to change without notice. The information provided regarding holdings is not a recommendation to buy or sell any security. Portfolio holdings are fluid and are subject to daily change based on market conditions and other factors. Past Performance does not guarantee future results.

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