Van Eck Global’s Market Vectors exchange traded fund division launched the first “fallen angels” corporate debt ETF Wednesday.
According to a press release, the Market Vectors Fallen Angel High Yield Bond ETF (NYSEArca: ANGL) is designed to follow the U.S. dollar denominated Fallen Angels segment of the corporate high-yield bond market, which makes up 15% of all U.S. dollar denominated high-yield bonds.
Bonds considered as Fallen Angels were originally given an investment grade ratings between AAA and BBB-, but have since been designated non-investment grade, speculative grade or junk status as the issuing company fell on hard times. This is not to be confused with other junk bonds that originally came with a speculative, non-investment grade rating upon issuance.
ANGL tries to reflect the performance of the BofA Merrill Lynch U.S. Fallen Angel High Yield Index, which includes below investment-grade corporate bonds that were rated investment grade at the time of issuance but have since been demoted.
The new fund holds non-investment grade Fallen Angel securities, with ratings of BB 72.2%, B 19.3%, CCC 7.6%, CC 0.8% and C 0.1%.
Sector allocations include: basic industry 11.4%, autos 6.3%, industrial services 5.8%, media 3.1%, capital goods 1.7%, consumer non-cyclical 0.5%, telecom 13.8%, healthcare 1.8%, consumer cyclical 6.8%, energy 8.7%, technology 1.0%, real estate 1.7%, banking 25.1%, financial services 5.4%, insurance 2.5% and utilities 4.3%.