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VanEck Enhances Fallen Angel Bond ETF’s Holdings: Portfolio Products

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declining red arrow on chartVanEck 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.

Pacer Advisors to Liquidate Retail Real Estate ETF

The Pacer Funds Trust board of trustees decided to close and liquidate the Pacer Benchmark Retail Real Estate SCTR ETF (RTL, net expense ratio of 0.60%), according to Pacer Advisors, the fund’s investment advisor.

A company spokesman told ThinkAdvisor the fund is being liquidated “because it had a hard time gathering assets in general due to the difficult environment facing retail real estate leading up to and during the COVID-19 pandemic. It had less than $1 Million in AUM at the end of Q1.”

The fund will start liquidating its portfolio assets May 11. It will be closed to orders for new creation units May 21; then complete its liquidation on or around May 22, the firm said.

FTSE Russell Extends Licensing Agreement with Cboe

FTSE Russell said it signed a 10-year extension of its licensing agreement with Cboe Global Markets to develop and list options based on FTSE Russell global indexes. “There is also an opportunity to expand their options offering to nearly two dozen additional FTSE Russell Indexes,” said FTSE Russell and the Cboe in a joint announcement.

With the collaboration, started in 2015, Cboe has exclusive U.S. rights to list cash-settled index options on the Russell 2000 Index, Russell 1000 Index and Russell 1000 Style (Growth & Value) Indexes.

FTSE Russell also said it will proceed with its annual reconstitution of its indexes despite the volatile market conditions seen in the first quarter. It had considered deferring the 2020 annual reconstitution of its indexes or making a  temporary change made to its methodology to reduce the size of rebalance transactions but, based on the feedback it received, decided against it. The firm said it “continues to monitor the markets and will publish further notices should the situation change.”

— Check out last week’s portfolio product roundup here: Schwab Is Making Changes to U.S. REIT ETF.


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