(FALN) iShares Fallen Angels USD - Ratings and Ratios

The iShares Fallen Angels USD Bond ETF (NASDAQ:FALN) zeroes in on a unique segment of the bond market: fallen angels. These are bonds that were initially rated investment grade but have since been downgraded to high-yield status. This strategy can be appealing because these bonds often come with higher yields than their investment-grade counterparts, yet they typically carry less default risk compared to other high-yield bonds.

FALNs structure as an ETF offers transparency and diversification, tracking an index that focuses on U.S. dollar-denominated, high-yield corporate bonds. The fund is required to invest at least 80% of its assets in these component securities and 90% in the types of fixed income securities included in the index. This approach ensures alignment with the target market segment, providing exposure to a specific subset of the high-yield market that may offer attractive risk-adjusted returns.

With assets under management (AUM) of approximately $2.04 billion, FALN is a sizeable fund, which can indicate better liquidity and tighter bid-ask spreads. The funds focus on fallen angels allows investors to tap into the potential of these uniquely situated bonds, making it a consideration for those seeking yield in the high-yield bond universe without the higher risk typically associated with lower-rated bonds.