Proprietary Data Insights Financial Pros’ Top High-Yield Bond ETF Searches in the Last Month
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The High Yield Bond ETF With an Amazing Edge |
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Wealth managers have a love/hate relationship with high-yield bonds. Junk bond funds gained popularity in the 1980s when investors realized they could diversify away risk by owning a broad basket of low-quality bonds. While they offer better yields than treasuries, high-yield bonds come with more risk. But it is the 5th most-searched high-yield bond ETF that caught our attention because this is the first time we’ve seen it appear in our Trackstar search data. And it’s very different from every other high-yield bond ETF we’ve ever encountered. Key Facts About ANGL
Imagine a company like Xerox. Great decades ago. Now it’s garbage. VanEck’s Fallen Angel High Yield Bond ETF (ANGL) buys bonds in companies like Xerox – bonds that were rated as investment grade at the time of issuance but are now rated as junk. They also have to be denominated in U.S. dollars and issued in the U.S. It’s a pretty specific subset of companies. However, it’s outperformed the broad high-yield bond market 14 of the last 19 calendar years, according to VanEck. You’ll probably recognize a few names amongst the top holdings.
Obviously, not many bonds meet this specific criteria. But 139 holdings aren’t bad, though as you’ll find out below, typical funds hold 1,000-2,000. Unsurprisingly, many consumer cyclical corporate bonds make up a large chunk of the portfolio, as discretionary items can quickly fall out of fashion.
Performance Like all bonds, ANGL took a hit when the Fed raised interest rates. However, it’s overall performance through the decade is excellent.
Competition To get a clear picture of how ANGL’s has performed, we stacked it up against the most popular high-yield bond ETFs.
Despite it’s more limited holdings, ANGL has outperformed other more diversified high-yield bonds. And interestingly, the blend of emerging market risk and junk bonds doesn’t provide better overall returns.
Our Opinion 10/10 ANGL is a niche strategy that delivers better returns than its competitors. Although past performance does not guarantee future results, we see a real edge with this investing strategy. So, if you want to add an uncorrelated bond investment fund to your portfolio, you should consider ANGL. |
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