Janus later allowed Canary to time the Janus High Yield Fund.
Experimenting with variations might yield funds better suited to investors' needs and expectations, he said.
Kevin R. Lorenz, who manages the TIAA-CREF High Yield fund, described his approach.
"Evidence suggests that market timing is incredibly hard," said Michael Abata, a manager of the Invesco Low Volatility Equity Yield fund.
The complaint includes an excerpt from a prospectus for the Janus High Yield fund, one of the funds that Mr. Stern traded, that described the company's policy.
But over all the average performance of high yield funds, according to Lipper Inc., has been better than the index in just 7 of the last 19 years.
Andrew Feltus, lead manager of the Pioneer Global High Yield fund, and Darren Hughes, co-manager of the Invesco High Yield fund, foresee returns of 6 to 7 percent this year for junk bonds in general.
Many people look to 2001 as a recovery year for high-yield bonds, said Brendan M. White, manager of the Touchstone High Yield fund and senior portfolio manager at Fort Washington Investment Advisors, but he is skeptical.
Brendan M. White, manager of the Touchstone High Yield fund and senior portfolio manager at Fort Washington Investment Advisors in Cincinnati, says he expects a "reasonably tough market going forward" and predicts that "defaults will increase in the near future".
High-yield funds like T. Rowe Price's High Yield Fund (PRHYX), up 49% last year, and Fidelity Capital & Income (FAGIX), up 72%, won't continue breaking performance records.
One such fund is the Helios High Yield Fund (HHY, 8).
