Dividend-News

Daily dividend news for investors in dividend stocks


FALN: Another High Yield ETF For Those Looking To Play It Safe

Published Mon, 16 Nov 2020 05:24:29 -0500 on Seeking Alpha

Seeking AlphaETF AnalysisFALN: Another High Yield ETF For Those Looking To Play It SafeNov. 16, 2020 5:24 AM ET|| About: iShares Fallen Angels USD Bond ETF (FALN), Includes: ANGLby: Dividend SeekerDividend Seeker ETF investing, Dividend Investing, long-term horizon, ValueSummaryAs we approach year-end, I continue to believe investors should build on their equity hedges.
While I tend to favor investment grade debt, fallen angels are a safer way to approach the high yield debt market.
FALN has a lower expense ratio than its peer, ANGL, and slightly better performance over time.

Main Thesis
The purpose of this article is to evaluate the iShares Fallen Angels USD Bond ETF (FALN) as an investment option. With the markets sitting at all-time highs, I see merit to taking some risk off the table, by shedding some equity exposure and lower rated high yield bonds. While FALN is made up of junk debt, it holds fallen angels, which are bonds that were recently investment grade and subsequently downgraded. Most of these bonds fall in the BB-rated category, which is a sub-sector of high yield that is typically safer and posts higher returns. Given that leverage is up across the high yield space, I see focusing on fallen angels as a prudent course of action. Finally, FALN has a lower expense ratio and better short term performance than similar funds, making it a good option for investors interested in this space.
Background
First, a little about FALN. This is a high yield bond ETF with a primary objective "to track the investment results of an index composed of U.S. dollar- denominated, high yield corporate bonds that were previously rated investment grade." Currently, the fund sits at $28.17/share and has an annual yield of 5.25%. This is my first review of FALN, although I have covered the fallen angels sector multiple times in the past by writing on the VanEck Vectors Fallen Angel High Yield Bond ETF (ANGL), most recently in early September. While ANGL has... Read more


ANGL - ANGL
ANGL - ANGL  


Older articles featuring Angl (ANGL):
U.S. High-Yield Default Rates Double... Quality Matters
More On Average, Annual Return And Tough Week For High Yield
No New Highs For High Yield
Midyear Outlook: Bond Investing In The Era Of Low And No Yield
The One Metric All High-Yield Investors Should Know
High Yield Credit Rally Really Rolling
Style-Box Update, Small-Cap And High-Yield, And Sector Returns
Sifting Through The Rubble Of The High Yield Sector
Coronavirus Roundtable - The Yield Squeeze And Income Opportunities
Watch High Yield Bonds And Leveraged Loans For Distress In Financial Sector: Ed Harrison

More