VanEck US Fallen Angel High Yield Bond UCITS ETF is available on the London Stock Exchange and Deutsche Börse Xetra for a total expense ratio of 0.35% and will be physically replicated.
The monthly rebalanced ETF will track the ICE US Fallen Angel High Yield 10% Constrained index, which is comprised of high yield US dollar credit that was originally issued at investment grade but has since fallen below.
Tabula IM launches Global High Yield Fallen Angels ETF
The fund’s investment strategy targets sectors that experience frequent downgrades, such as the banking and energy sectors.
Fallen angels tend to offer higher quality credit than the broader high yield market, often with a greater concentration of BB rated bonds.
Martijn Rozemuller, CEO at VanEck Europe, said: “Many institutional investors are often forced by their investment mandate to sell bonds when they are downgraded below investment grade. Our strategy systematically buys these oversold and possibly undervalued bonds.
“Fallen angels have historically shown a higher likelihood of returning to investment grade status following a downgrade than the broad spectrum of high-yield bonds. This offers upside potential that investors can participate in with our ETF.”
