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Rating:ETF Roundup: Fox Bizz Talks Up Fallen Angel Bond ETFs Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, September 3, 2013

ETF Roundup: Fox Bizz Talks Up Fallen Angel Bond ETFs

News summary by MFWire's editors

Fox Business reports investors are taking advantage of bond ETFs' yield, even though risk goes hand in hand. Investors are also demanding higher yields of bonds at the higher end of the junk spectrum, according to S&P Capital IQ, Fox Business writes.

Fox Business reports that the research note reads, "The most common way for a bond to stop from investment grade to speculative, also known as becoming a fallen angel, is to be downgraded from BBB- to BB+. Through August 8 of this year, there were 17 U.S. companies that fell to speculative grade in Standard & Poor's ratings, 13 of them have fallen one notch. Meanwhile, in the other four instances, the credit ratings fell multiple notches."

Investors are drawn to fallen angel bonds because they often have better credit profiles than traditional junk bonds, thus having lower default potential and offering the possibility of "robust" capital appreciation, Fox Business writes, citing Van Eck [profile] Market Vectors Fallen Angel High Yield Bond ETF.

Fox Business also names these other bond ETFs: BlackRock [profile] iShares Baa-Ba Rated Corporate Bond ETF, iShares iBoxx $ High Yield corporate Bond ETF and State Street Bank & Trust [profile] SPDR BofA Merrill Lynch Crossover Corporate Bond ETF.

Despite the continually panicked gold market, interest in silver ETFs has been higher, Zacks' Eric Dutram writes. Though gold ETFs have experienced fairly flat asset accumulation over the past month, silver ETFs had more than $100 million in inflows, Dutram points out.

Silver rose by almost double digits in the past three months and geopolitical events such as import taxes on gold in India, may only serve to build on that momentum. Dutram suggested the BlackRock [profile] iShares Silver Trust ETF and ETFS Physical Silver Shares for silver ETF plays.

Emerging markets ETFs haven't had a great year, with investors pulling more than $11 billion from the two largest developing country ETFs, Vanguard [profile] Vanguard FTSE Emerging Markets and BlackRock [profile] iShares MSCI Emerging Markets, ETF Trends' John Spence writes.

One specialized emerging markets ETF has been able to break out from that trend, however: Emerging Global Advisors [profile] EGShares Emerging Markets Consumer ETF. The ETF gathered $373 million of inflows year to date and total assets came to over $1 billion, Spence reports.

Spence spoke to CIO of Emerging Global Advisors, Richard Kang, was quoted as saying, "As the developed world transitions from a society of spenders to a more prudent one of increased savings, the emerging world is slowly moving in the other direction. Although individually the emerging market consumer may have a smaller amount to spend, because of the size and youth of this demographic, they are able to compensate for the massive structural changes happening in the developing world. This is the first emerging market fund paying attention to this trend."

Morningstar's Alex Bryan touted a small-cap dividend ETF for its performance and its "deeper value": WisdomTree [profile] SmallCap Dividend.

The ETF invests in dividend-paying small cap companies meeting small-cap liquidity requirements and weights them by the dollar value of dividends they are expected to pay out over the next year, Bryan writes.

The fund captures value premium better than its peers by increasing its exposure to stocks that have become cheaper relative to the dividends and reduces exposure on stocks that have become more expensive.

To read more, click here, here, here and here.  

Edited by: Casey Quinlan

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