Market Vectors Fallen Angel High Yield Bond ETF (ANGL) has surpassed USD100 million in assets under management, with USD111.4 million.
“Fallen angels have continued to offer a compelling value proposition,” says Meredith Larson, Product Manager for VanEck.
“Fallen angels,” corporate bonds that were investment grade at the time of issuance and were subsequently downgraded to below investment grade, have significantly outperformed the broad corporate high yield bond market in 2016. As of 18 March, 2016, the BofA Merrill Lynch US Fallen Angel High Yield Index returned 7.1 per cent year to date, nearly twice the 3.6 per cent return from the BofA Merrill Lynch US High Yield Index.
Fallen angels’ outperformance in 2016 had been due primarily to their greater exposure to the basic industry and energy sectors and higher average credit quality.
Larson says: “Their issuers often have stronger balance sheets compared to high yield issuers broadly, but forced selling from investment grade-only investors can cause these bonds to become oversold. This forced selling creates the potential for a fallen angel fund to capture price inefficiencies that may offer future price appreciation.”
Market Vectors Fallen Angel High Yield Bond ETF (ANGL) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the BofA Merrill Lynch US Fallen Angel High Yield Index.