‘Fallen Angel’ Bond ETF Sports 6% Yield
July 31st 2012 at 12:00pm by Tom Lydon
ETF Spotlight on the Market Vectors Fallen Angel High Yield Bond ETF (NYSEArca: ANGL), part of an ongoing series.
ANGL was launched in April and is currently offering a yield of more than 6%.
Assets: $10.2 million.
Objective: The Market Vectors Fallen Angel High Yield Bond ETF tries to reflect the performance of the BofA Merrill Lynch U.S. Fallen Angel high Yield Index, which holds below investment grade corporate debt that were rated investment grade at the time of issuance.
Holdings: Top holdings include: Masco Corp. 3.2%, Frontier Communications 3.0%, Regions Bank/Birmingham AL 2.9%, JC Penney Corp 2.9% and Toys R Us Inc 2.7%.
What You Should Know:
- Van Eck Global sponsors the fund. [New Fallen Angel Bond ETF]
- ANGL has an expense ratio of 0.40%.
- The fund has 66 holdings and the top 10 make up 26.1% of the overall portfolio.
- Bond maturities include: 1-3 years 18.3%, 3-5 years 16.7%, 5-7 years 10.0%, 7-10 years 5.0%, 10-15 years 11.7%, 15-20 years 14.2%, 20-30 years 12.2% and 30+ years 10.3%.
- The bonds held have an average duration of 5.9 years and an average 11.8 years to maturity.
- Allocations by S&P credit rating include: BBB 17.7%, BB 53.0%, B 19.7%, CCC 6.7% and CC 0.6%.
- Top country allocations include: U.S. 82.9%, U.K. 6.4%, Norway 4.2%, France 2.4% and Cayman Islands 2.1%.
- Sector allocations include: telecom 14.2%, basic industry 12.4%, energy 9.0%, consumer cyclical 6.7%, services 6.1%, media 3.2%, healthcare 2.0%, capital goods 1.8%, tech 1.7%, real estate 1.5%, automotive 0.5%, consumer non-cyclical 0.5%, banking 27.8%, financial services 5.1%, insurance 2.6% and utility 4.7%.
- ANGL has a 30-day SEC yield of 6.33%.
- The ETF is up 1.5% over the last month and up 1.7% over the past three months.
- The fund started trading on April 10, 2012.
- “‘Fallen angels’ are corporate bonds that were investment grade at issue but have since been downgraded to high yield,” according to Morningstar analyst Patricia Oey.
- “Generally speaking, fallen-angel issuers tend to be more-established firms and have better debt profiles and greater financing flexibility than original high-yield issuers,” Oey added.
The Latest News:
- In the week ended July 27, high-yield corporate bond sales dropped 47% and yields climbed for the first time in two months as investors fled risky assets in light of the recent Eurozone rumblings, reports Sarika Gangar for Bloomberg.
- There is a lot of pure money looking to be put to work in good high-quality names for buy-and-hold accounts,” Timothy Cox, executive director of debt capital markets at Mizuho Securities USA Inc., said in the article.
- Speculative investment grade bonds have underperformed investment grade notes for the longest period since November, reports Lisa Abramowicz for Bloomberg.
- According to Bank of America, bond fund managers are shifting back to safer corporate bonds.
- “In the next month or so, with what’s happening in Europe, we’ll see some volatility,” Adam Richmond, a high-yield bond strategist at Morgan Stanley, said in the article. “If I were an investor, I’d be looking to add on weakness, but maybe not today.”
Market Vectors Fallen Angel High Yield Bond ETF
For past stories in this series, visit our ETF Spotlight category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.