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  • Higher Quality High Yield*

    Fallen angel bonds have historically outperformed the broad high yield corporate bond market and the average high yield bond fund manager.

     

    Source: FactSet. Data as of September, 30, 2019. Past performance is no guarantee of future performance. Index performance is not illustrative of fund performance. See important disclosures below.

    Not All High Yield Bonds are Created Equal

    Fallen angels, high yield bonds originally issued as investment grade, are a subset of the high yield bond universe.1Relative to the broad high yield bond market, fallen angels have had:

    • Historically higher concentrations of BB-rated bonds
    • Outperformance with higher risk-adjusted returns
     

    Potential to Capture Embedded Value

    Fallen angel high yield bond outperformance can be attributed to an embedded value proposition that is not common to the original-issue high yield bond market.

    Historically, fallen angels:

    • Tend to be issued by larger, more established companies
    • Have a higher rate of upgrades to investment grade2 
    • Offer a contrarian approach to invest in bonds exposed to heavy selling

    Fallen Angel Bonds as an Investment

  • Fran Rodilosso,
    Head of Fixed Income ETF Portfolio Management
     

     

     
  • © Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

    On September 30, 2019 ANGL received a five star Morningstar rating on a overall basis among 613 funds in the high yield bond category. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics.

    ∗, 1 Historically higher average credit quality and risk-adjusted returns than the broad high yield bond universe, when comparing ICE BofAML US Fallen Angel High Yield Index and ICE BofAML US High Yield Index. ICE BofAML rating is a proprietary composite of various rating agencies. Risk-adjusted returns are measured by Sharpe ratio, which is a statistical measure of the excess return of a portfolio over a risk-free rate of return (as found with a U.S. Treasury security) per unit of the portfolio’s standard deviation of returns.
    2Source: ICE BofA. Data as of 9/30/2019. Based on average ascension rates to investment grade since 12/31/2003.
    3Morningstar Ratings : If applicable, when the ETF is rated three stars or more for any given period. ©Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

    RISK CONSIDERATIONS: An investment in the Fund may be subject to risk which include, among others, credit risk, call risk, and interest rate risk, all of which may adversely affect the Fund. High yield bonds may be subject to greater risk of loss of income and principal and are likely to be more sensitive to adverse economic changes than higher rated securities. International investing involves additional risks which include greater market volatility, the availability of less reliable financial information, higher transactional and custody costs, taxation by foreign governments, decreased market liquidity and political instability. The Fund’s assets may be concentrated in a particular sector and may be subject to more risk than investments in a diverse group of sectors.

    Important Disclosures
    Index performance is not illustrative of fund performance. Fund performance current to the most recent month end is available by visiting www.vaneck.com/etfs. Historical performance is not indicative of future results; current data may differ from data quoted. Indexes are unmanaged and are not securities in which an investment can be made.

    ICE BofAML US Fallen Angel High Yield Index (H0FA, “Index”), formerly known as BofA Merrill Lynch US Fallen Angel High Yield Index prior to 10/23/2017, is a subset of the ICE BofAML US High Yield Index (H0A0, “Broad Index”), formerly known as BofA Merrill Lynch US High Yield Index prior to 10/23/2017), including securities that were rated investment grade at time of issuance. H0FA is not representative of the entire fallen angel high yield corporate bond market.

    ICE BofAML US High Yield Index (H0A0, “Broad HY Index”), formerly known as BofA Merrill Lynch US High Yield Index prior to 10/23/2017, is comprised of below-investment grade corporate bonds (based on an average of various rating agencies) denominated in U.S. dollars.

    Bloomberg Barclays US High Yield Very Liquid Index is the market of USD-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Qualifying issues must have been issued within the past three years, have a USD 600 million minimum amount outstanding and include only the largest issue from each issuer.

    Morningstar High-Yield Bond Average category is comprised of open-end mutual funds with an investment objective to seek returns via significant exposure to low quality bonds, those that are either unrated or rated by a major agency as BB or lower.

    ICE Data Indices, LLC and its affiliates (“ICE Data”) indices and related information, the name "ICE Data", and related trademarks, are intellectual property licensed from ICE Data, and may not be copied, used, or distributed without ICE Data's prior written approval. The licensee's products have not been passed on as to their legality or suitability, and are not regulated, issued, endorsed, sold, guaranteed, or promoted by ICE Data. ICE Data MAKES NO WARRANTIES AND BEARS NO LIABILITY WITH RESPECT TO THE INDICES, ANY RELATED INFORMATION, ITS TRADEMARKS, OR THE PRODUCT(S) (INCLUDING WITHOUT LIMITATION, THEIR QUALITY, ACCURACY, SUITABILITY AND/OR COMPLETENESS).

    Performance and characteristics of the ICE BofA US Fallen Angel High Yield Index (H0FA) are quoted throughout this material. H0FA is representative of the entire Fallen Angels high yield corporate bond market. H0FA does not represent the performance or yield of the Fund.

    Fund shares are not individually redeemable and will be issued and redeemed at their "Net Asset Value" (NAV) only through certain authorized broker-dealers in large, specified blocks of shares called "creation units" and otherwise can be bought and sold only through exchange trading. Creation units are issued and redeemed principally in kind. Shares may trade at a premium or discount to their NAV in the secondary market.

    The NAV of a VanEck Vectors exchange-traded fund (ETF) is determined at the close of each business day, and represents the U.S. dollar value of one share of the fund; it is calculated by taking the total assets of the fund, subtracting total liabilities, and dividing by the total number of shares outstanding. The NAV is not necessarily the same as the ETF’s intraday trading value. Total returns are based upon closing “market price” (price) of the ETF on the dates listed. VanEck Vectors ETF investors should not expect to buy or sell shares at NAV.

    Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. To obtain a free prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit www.vaneck.com. Please read the prospectus and summary prospectus carefully before investing.