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May 11, 2020 at 10:02 AM
VanEck enhanced the holdings in its Fallen Angel High Yield Bond ETF (ANGL, with a net expense ratio of 0.35%) as part of the monthly rebalance for the exchange-traded fund.
The firm has increased the ETF’s exposure to higher-rated, deeply discounted bonds as downgrades increase, it said, noting the ETF seeks to replicate as closely as possible the price and yield performance of the ICE US Fallen Angel High Yield 10% Constrained Index, before fees and expenses.
Fallen angels, which were once investment-grade rating but fell to junk bond status, historically tend to have “higher credit quality and may be better poised for a rebound than other corners of the junk bond marketplace,” according to VanEck. The fallen angel universe increased 50% in April, with $72 billion of new fallen angels entering the category, it said.
Following this latest rebalancing of ANGL and its underlying index, more than 90% of the fund’s holdings are now rated BB, the highest rating within high yield, VanEck said. The latest additions to the portfolio are “skewed towards the energy and automotive sectors, as both of those areas of the economy have been hit with a wave of downgrades in recent weeks,” VanEck said.
First Trust Plans to Introduce 2 Target Outcome ETFs
First Trust Advisors plans to launch the May Series of its Target Outcome ETFs on May 18, including two funds: The FT Cboe Vest U.S. Equity Buffer ETF–May (FMAY) and FT Cboe Vest U.S. Equity Deep Buffer ETF–May (DMAY), each with a 0.85% expense ratio.
The ETFs will trade on the Chicago Board Options Exchange and seeks returns (before fees and expenses) that match the price return of the SPDR S&P 500 ETF Trust (SPY on NYSE Arca) up to a predetermined upside cap, while providing a buffer against potential SPY losses, First Trust said. The funds are managed and sub-advised by Cboe Vest Financial using a target outcome strategy or pre-determined target investment outcome, First Trust said.
Separately, First Trust launched a new actively managed ETF, the First Trust TCW Securitized Plus ETF (DEED, with a net expense ratio of 0.65%). It trades on NYSE Arca, is sub-advised and managed by TCW Investment Management Company and seeks to maximize long-term total return by allocating investments across a range of securitized asset classes.
DEED will invest at least 50% of its total assets in securities issued or guaranteed by the U.S. government, its agencies or instrumentalities. It may invest up to 50% of its total assets in non-agency, non-government sponsored entity securities and privately-issued mortgage-related and other asset-backed securities, including residential and commercial mortgage-backed securities, asset-backed securities and collateralized loan obligations.
