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FinEx launches Fallen Angels ETF


FinEx ETF has launched the FinEx Fallen Angels UCITS ETF, which allows investors to capture risk premium in USD bonds classified as Fallen Angels. The fund tracks Solactive USD Fallen Angel Issuer Capped Index.

After the outbreak of the coronavirus pandemic, the USD high yield space has seen a dramatic expansion following the market turmoil in 2020. As a result, billions of dollars worth of bonds were re-classified from investment grade to high yield. Particularly interesting to long-term investors remains one specific area of the sub-investment grade segment: Fallen Angels.

Fallen Angel bonds are defined as bonds that have recently been downgraded from investment grade to high yield while belonging to the relatively attractive BB+ to BB- rating segment. Since these corporate bonds have recently lost their prestigious investment grade, they are no longer eligible for investors, such as pension funds, who often face restrictions for investments in non-IG bonds and thus faced some desinvestment pressure.

Through investing in Fallen Angel bonds, investors can benefit from higher expected risk-adjusted returns of the sector. Solactive’s robust methodology allows for both segment representation and rules-based and transparent selection of the index constituents.

“As the indexed fixed income market matures, index strategies underpinning passive funds become more sophisticated,” comments Timo Pfeiffer, Chief Markets Officer at Solactive. “The FinEx Fallen Angel UCITS ETF is a prime example of a passive strategy exploiting a structural characteristic deeply embedded in the fixed income market previously captured by mostly active investors.”

Oleg Yankelev, CEO of AMC FinEx Plus in Russia, said: “We continue to rely on Solactive to deliver the best possible solution for implementing index strategies. The FinEx Fallen Angel UCITS ETF is an exciting opportunity to make a smart move among the global search for yield. This segment of high yield bond market is exactly where many investors want to be – equity-like returns with fixed income risks.”

The FinEx Fallen Angels UCITS ETF started trading on 22 April, 2021, on Moscow Exchange.

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