““Fallen angels have offered a compelling value proposition,” Rodilosso said. “They often have stronger balance sheets compared to high-yield broadly, and institutions are often forced to sell them when investment-grade bonds are downgraded to high-yield, creating potential price inefficiencies. As a result, despite typically lower yields relative to the broad high-yield bond market (5.22% v. 6.66%, respectively, as of December 9, 2014), fallen angels have tended to have higher average ascension rates back to investment grade than original issue high-yield bonds, as measured by the BofA Merrill Lynch US Original Issue High Yield Index (H0HY), helping to contribute to the H0FA index’s long-term outperformance.” [Ideas for Sticking With Junk Bond ETFs]
Lack of energy exposure is not guaranteed insulation from market volatility as highlighted by ANGL hitting a 52-week low Wednesday. However, the ETF’s 3.6% 90-day loss is better than the average loss of 5% over the same period for the two largest U.S. junk bond ETFs.
ANGL has a 30-day SEC yield of 4.67% and an effective duration of 5.36 years, according to issuer data.
Market Vectors Fallen Angel High Yield Bond ETF
