iShares Fallen Angels USD Bond ETF (FALN)

US ETF iShares Fallen Angels USD Bond ETF Summary

Profile:

The iShares Fallen Angels USD Bond ETF (FALN) invests in USD-denominated fallen angel bonds. Fallen angels are bonds that have been downgraded from investment grade to high yield (junk) status by one or more major credit rating agencies. The ETF seeks to track the investment results of the Bloomberg Barclays Fallen Angel USD Bond Index.

Objective:

FALN's primary investment goal is to provide high current income with exposure to the high-yield bond market.

Issuer:

BlackRock:

• Reputation and Reliability: BlackRock is the world's largest asset manager with a strong reputation for its investment expertise and innovation.
• Management: FALN is managed by BlackRock's experienced team of fixed income professionals.

Market Share:

FALN is the largest ETF in the fallen angel bond market with approximately 59% market share as of November 2023.

Total Net Assets:

FALN currently has over $7 billion in total net assets.

Moat:

• First-mover advantage: FALN was the first fallen angel bond ETF in the market, giving it a head start in terms of assets and brand recognition.
• Liquidity: FALN's large size provides high liquidity for investors.
• Low expense ratio: FALN's expense ratio of 0.35% is lower than most other fallen angel bond ETFs.

Financial Performance:

• Historical performance: FALN has generally outperformed its benchmark index, the Bloomberg Barclays Fallen Angel USD Bond Index, since its inception in 2011.
• Benchmark Comparison: The ETF's performance can be volatile due to its focus on high-yield bonds, but it has also generated significant income for investors.

Growth Trajectory:

The high-yield bond market is expected to grow in the coming years, which could benefit FALN.

Liquidity:

• Average Trading Volume: FALN's average daily trading volume is over 1 million shares, making it a very liquid ETF.
• Bid-Ask Spread: FALN's bid-ask spread is tight, indicating low transaction costs for investors.

Market Dynamics:

• Economic indicators: FALN's performance is sensitive to changes in economic growth, interest rates, and inflation.
• Sector growth prospects: The growth prospects of the high-yield bond market depend on the overall health of the economy.
• Current market conditions: FALN can be negatively impacted by rising interest rates and economic uncertainty.

Competitors:

• iShares 0-5 Year High Yield Corporate Bond ETF (HYG)
• SPDR Bloomberg Barclays High Yield Bond ETF (JNK)
• VanEck Fallen Angel High Yield Bond ETF (ANGL)

Expense Ratio:

FALN's expense ratio is 0.35%.

Investment Approach and Strategy:

• Strategy: FALN passively tracks the Bloomberg Barclays Fallen Angel USD Bond Index.
• Composition: The ETF invests in a diversified portfolio of fallen angel bonds across various industries and sectors.

Key Points:

• FALN provides exposure to the high-yield bond market with a focus on fallen angel bonds.
• FALN offers income generation potential and diversification benefits.
• FALN has a lower expense ratio compared to many other fallen angel bond ETFs.

Risks:

• Volatility: FALN is exposed to the volatility of the high-yield bond market.
• Market Risk: FALN is subject to the credit risk of the bonds in its portfolio.
• Interest Rate Risk: FALN's value can decline if interest rates rise.

Who Should Consider Investing:

• Investors seeking high current income
• Investors seeking exposure to the high-yield bond market
• Investors interested in fallen angel bonds
• Investors with a higher risk tolerance

Fundamental Rating Based on AI:

8.5 out of 10. FALN scores highly in terms of its market position, liquidity, and expense ratio. However, its focus on fallen angel bonds exposes it to higher volatility and credit risk.

Resources and Disclaimers:

This summary is based on information available from the following sources:

• iShares website
• Bloomberg Terminal
• ETF Database

Please note that this summary is for informational purposes only and should not be considered as investment advice. Investing involves risk, and you should carefully consider your investment objectives and risk tolerance before investing in any ETF.