Milestones can be meaningful in the exchange traded funds industry, and on that note, the VanEck Vectors Fallen Angel High Yield Bond ETF (NASDAQ: ANGL) is celebrating its tenth anniversary.

Indeed, making it to the 10-year mark in the fiercely competitive landscape is an accomplishment in its own right, but surviving and thriving are two different things. ANGL, which tracks the ICE US Fallen Angel High Yield 10% Constrained Index, is thriving. An assets under management tally of $4.2 billion confirms as much, but there’s more to the story.

ANGL was the original ETF providing exposure to fallen angel bonds — a form of corporate debt that’s born with investment-grade ratings and is later downgraded to junk status. That distinction relative to traditional junk bonds is meaningful.

“But fallen angels are a distinct segment and have consistently outperformed the broader market over the past two decades because of the unique attributes they have, which result from the crossover between investment grade and high yield,” says VanEck’s William Sokol in a recent note.

Something that many investors who aren’t familiar with fallen angels may not realize is that because these bonds are born with investment-grade ratings, they usually have superior quality traits relative to standard high-yield corporate bonds. Additionally, fallen angels are more likely to be upgraded to investment-grade status than traditional junk bonds, potentially providing investors with more opportunity for capital appreciation.

“ANGL tends to be tilted towards higher quality bonds than the broad market, with currently about 90% rated BB (the highest quality rating within high yield) versus about 52% in the broad market,” adds Sokol.

Additionally, ANGL, although it’s passively managed, is more adept at capturing value than traditional corporate bond funds. When bonds enter ANGL’s index, it’s likely that the prices already fell considerably as the result of losing an investment-grade rating.

While that makes ANGL something of a contrarian strategy, it also steers investors clear of bonds that may be overvalued while positioning market participants to capitalize on rebounds by bonds that may have been punished too severely.

“These three main characteristics—buying at deep discounts due to forced selling, higher quality and the contrarian sector exposure—really define fallen angels and have driven long term performance,” concludes Sokol.

ANGL sports a 30-day SEC yield of 4.79%, which is more than 35 basis points ahead of the largest junk bond ETF.

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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.