Assessing ANGL ETF
As of January 29, ANGL held 222 bonds, over 91% of which were rated BB or B. The fund has an effective duration of 5.82 years.
“Fallen angel risk may not be as widespread as some anticipate in the next downturn due to varying credit stories across issuers,” according to Fitch. “As of YE 2018, approximately one-fifth of ‘BBB’ and ‘BBB-‘ Fitch-rated issuers had leverage above our potential downgrade thresholds, with most being REITS, food, beverage and tobacco, and building materials and construction companies. We expect this percentage to decline to 15% in 2019 and 5% in 2020 due in most cases to post-acquisition deleveraging.”
Fallen angel issuers tend to be larger and more established than many other junk bond issuers. Relative to the broader high-yield market, fallen angels have historically included greater concentration of higher quality or BB-rated speculative-grade bonds. Historically, fallen angels have outperformed the broader junk bond market.
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