FinEx ETF has announced the launch of a new ETF, the FinEx Fallen Angels UCITS  ETF, that allows investors to capture risk premium in USD bonds classified as Fallen Angels. The fund  tracks Solactive USD Fallen Angel Issuer Capped Index. 

After the outbreak of the coronavirus pandemic, the USD high yield space has seen a dramatic expansion  following the market turmoil in 2020. As a result, billions of dollars worth of bonds were re-classified from  investment grade to high yield. Particularly interesting to long-term investors remains one specific area of the  sub-investment grade segment: Fallen Angels. 

Fallen Angel bonds are defined as bonds that have recently been downgraded from investment grade to high  yield while belonging to the relatively attractive BB+ to BB- rating segment. Since these corporate bonds have  recently lost their prestigious investment grade, they are no longer eligible for investors, such as pension  funds, who often face restrictions for investments in non-IG bonds and thus faced some desinvestment  pressure.  

Through investing in Fallen Angel bonds, investors can benefit from higher expected risk-adjusted returns of  the sector. Solactive’s robust methodology allows for both segment representation and rules-based and  transparent selection of the index constituents.  

"As the indexed fixed income market matures, index strategies underpinning passive funds become more  sophisticated," comments Timo Pfeiffer, Chief Markets Officer at Solactive. "The FinEx Fallen Angel UCITS  ETF is a prime example of a passive strategy exploiting a structural characteristic deeply embedded in the  fixed income market previously captured by mostly active investors." 

Oleg Yankelev, CEO of AMC FinEx Plus in Russia, said: “We continue to rely on Solactive to deliver the best  possible solution for implementing index strategies. The FinEx Fallen Angel UCITS ETF is an exciting  opportunity to make a smart move among the global search for yield. This segment of high yield bond market  is exactly where many investors want to be – equity-like returns with fixed income risks.”