As an investment strategy, that is. New funds aim to exploit opportunities in the beaten-down bond markets.

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To some professional investors, that spells bargains. Some new mutual funds are targeting opportunities in credit markets, particularly among higher-risk debt. Many established funds, meanwhile, are trying to do the same thing—although their strategies vary wildly.

“Managers are sifting through the muck of the credit markets, looking for investments whose prices may have been unnecessarily underpriced,” and using various strategies to try to profit, says Nadia Papagiannis, an analyst at fund tracker Morningstar Inc. in Chicago.

Opportunities started emerging in the last quarter of 2008 as highly leveraged hedge funds dumped many of their riskier assets to meet margin calls and redemption requests. “This created an incredible dislocation in some of these credit markets, like high-yield bonds, leveraged loans and convertible bonds,” Ms. Papagiannis says.

Those who jumped into high-yield funds at the start of this year have been rewarded well: This fund category is up 23% for the first half of the year, according to Morningstar.

The yields on some higher-risk bonds have fallen as their prices—which move in the opposite direction to yields—have risen. But analysts and stock pickers say there are still opportunities to find seriously undervalued investments.

“It’s a matter of finding individual credit calls,” says Jason Brady, manager of Thornburg Strategic Income.

Before you buy a high-yield bond fund, however, evaluate the holdings in your current funds. Some diversified bond funds, and even some stock funds, have bought low-rated bonds to boost overall returns, says Daniel Culloton, a Morningstar analyst.

For example, Osterweis Fund. a midcap stock portfolio, is holding a batch of short-term junk bonds in lieu of low-paying cash equivalents. Fund manager John Osterweis says, “We were able to buy short-term bonds at double-digit yields, over 10%. Now they’re probably in the 6% to 8% range, but that’s still far better than cash.” To minimize risk, he says, he looks for companies with enough cash on their books to repay their debt.

Here are some new funds in the credit arena that come with a strong selling point: management with proven track records.

Hotchkis & Wiley High Yield. Launched just last month, this high-yield fund is to be headed by two veterans from Pacific Investment Management Co. the bond-fund giant that is a unit of Allianz SE. Raymond G. Kennedy, former head of Pimco’s high-yield bond business, is at the helm now, and joining him in a matter of weeks will be Mark Hudoff, former global head of high-yield investments at Pimco.

The fund is looking for opportunities “from a deep-value standpoint”—bonds trading well below par, usually around 50 to 60 cents on the dollar, Mr. Kennedy says. The near future is likely to be rough going, he adds, with some “pretty visible defaults that will keep the market from really rallying.”

Many companies are likely to issue stock in coming months to pump up their balance sheets. This generally has a negative impact on stocks, but “it will help me in bonds,” Mr. Kennedy says. Some of the most undervalued investments, he says, will likely be found in the financial and auto-supplier industries.

The fund launch is a milestone for Hotchkis & Wiley Capital Management, a firm known for its focus on value stocks. It signals the thinking that value investors can find bargains among bonds just as they can among stocks, Mr. Kennedy says.

T. Rowe Price Strategic Income. This fund invests in all kinds of credit-market products, from corporate and convertible bonds to bank loans, mortgage-backed securities and Treasurys. “Wherever the opportunity is, except in equities,” says portfolio manager Steven Huber, former chief investment officer of the Maryland State Retirement and Pension System before moving to T. Rowe Price Group Inc.

Launched in December, the fund can invest up to 65% of its assets in non-investment-grade securities and up to 50% in foreign debt. While it aims for high income and capital appreciation, broad diversification should help mitigate risk, says Mr. Huber.

Current riskier holdings, primarily high-yield corporate bonds, emerging-market debt and leveraged loans, are 40% of assets. The fund returned 10.1% in the first half of this year.

AQR Diversified Arbitrage. This fund is the first mutual fund from hedge-fund manager AQR Capital Management, which invests $20 billion for institutional clients and is known for using quantitative computer-driven strategies. The fund uses various forms of arbitrage, which involves simultaneously buying and selling the same or similar investments in different markets to exploit price differences.

Aiming to exploit opportunities created when hedge funds started dumping assets last year, the fund is currently focusing on convertible-bond arbitrage: buying convertible bonds and selling short their underlying stocks.

“We try to capture a discrepancy between the price of the convertible bond and the convertible-bond components,” says portfolio manager Todd Pulvino. Those components are the corporate bond and a call option on the issuer’s common stock. “Often a convertible bond trades at a cheaper price than the underlying components, so if you buy the whole and sell the parts you can make some money.”

While in theory arbitrage strategies reduce risk, Ms. Papagiannis of Morningstar says, “There are risks that aren’t always apparent.” For example, because convertible bonds aren’t widely traded, if the credit markets seize up again, and demand for all but the safest securities dries up, a fund may have to dump thinly traded assets at fire-sale prices, she says.

The fund’s goal is to have little to no correlation to the stock market’s performance, and to deliver returns about three to five percentage points higher than the three-month Treasury index, Mr. Pulvino says. The fund returned 4.62% from its January launch through June 30.

—Ms. Hube is a writer based in Westport, Conn. Write to her at reports@wsj.com .