The ETF has an average yield to worst of 7.48%, an average modified duration of 5.49 years and an average coupon rate of 6.79%. The fund holds 396 securities and has an expense ratio of 0.40%.
Fallen Angel include prominent American brands like Ford (NYSE: F), JC Penney (NYSE: JCP) and The New York Times Company (NYSE: NYT). These issuers typically have better debt profiles, more financing flexibility and are larger or more established than original high-yield issuers. Additionally, Fallen Angels occupy the top end of the high-yield market, and according to Moody’s, may be considered for debt upgrades in the future.
“Although they were downgraded from investment grade status, many Fallen Angel issuers still retain a capital structure similar to investment grade issuers, which may enable Fallen Angel issuers to enjoy greater financing flexibility than original issue high yield issuers,” Fran Rodilosso, Fixed Income Portfolio Manager at Van Eck, said in the pres release. [iShares Lists New High-Yield ETFs]
“Many investors overlook Fallen Angels, but historical data shows that in six of the past nine years ending 2011, the U.S. dollar denominated Fallen Angels, as represented by The BofA Merrill Lynch U.S. Fallen Angel High Yield Index, have outperformed general U.S. dollar denominated corporate high yield bonds, as represented by The Barclays Capital high Yield Very Liquid Index,” Rodilosso added.
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Max Chen contributed to this article.