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Angel Oak Capital Advisors completes conversion of two mutual funds to ETFs: AOHY and MBS


Value-driven structured credit investing firm, Angel Oak Capital Advisors, LLC, has announced the completed conversions of two of its mutual funds to ETFs. 

The Angel Oak High Yield Opportunities Fund and the Angel Oak Total Return Bond Fund are ETFs as of February 16, the firm writes. The funds’ new names are Angel Oak High Yield Opportunities ETF (NYSE: AOHY) and Angel Oak Mortgage-Backed Securities ETF (NYSE: MBS), respectively.

The firm writes that the conversion underscores the positive momentum for Angel Oak’s ETF platform since launching in November of 2022. MBS and AOHY recently joined Angel Oak’s Income ETF (NYSE: CARY) and UltraShort Income ETF (NYSE: UYLD). The firm’s four ETFs combined have approximately USD350 million in assets under management, and the firm’s ETF platform, including its sub-advisory services, has approximately USD500 million in AUM. Angel Oak plans to broaden the new ETFs’ availability to its core investor audience; both MBS and AOHY will be available on major custodial platforms as well as wirehouse and independent broker-dealer platforms.

“We continue to be pleased with the response of our actively managed ETF products, and the latest conversions show our commitment to providing investors with unique options for income-driven solutions within the structured credit space,” says Sreeni Prabhu, managing partner and group chief investment officer for Angel Oak. “As leaders in structured credit investing, we’re dedicated to aligning our leading-edge solutions with investors’ goals.”

The MBS ETF will be an actively managed, pure-play residential mortgage credit ETF seeking to deliver stable income and price appreciation through both agency and non-agency residential mortgage-backed securities (RMBS). The specific RMBS focus separates this ETF from others in the market whose exposure to residential credit, if any, is typically offered via passive exposure to agency mortgage-backed securities. The fund is backed by Angel Oak’s team of RMBS experts, which has been investing in this area for more than 15 years.

The AOHY ETF has a strong track record, spanning approximately 15 years, of providing investors with a differentiated approach in the high-yield sector. This actively managed ETF seeks to invest in higher-quality, high-yield corporate bonds and securitised credit assets — a rarity among high-yield ETFs, which tend to be homogenous and benchmark trackers. Angel Oak has appointed a seasoned team of portfolio managers to lead the fund. They have more than 25 years of experience navigating corporate and securitised debt and have overseen the firm’s five-star Morningstar-rated high-yield bond fund since 2009.

“The successful conversion of these ETFs demonstrates Angel Oak’s emerging leadership in both the ETF landscape and, critically, in securitised credit investing,” says Ward Bortz, ETF portfolio manager and the head of distribution for US wealth for Angel Oak. “Investors coming over the hill of the recent bond bear market acknowledge the increased appeal of securitised credit and its potential returns, driving forward demand for these strategies. The debut of MBS and AOHY ETFs is Angel Oak’s next step forward in bringing our top-of-the-line, innovative strategies to investors in the market for accessible, liquid investment vehicles.”

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