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Retired Investor Finds Unexpected Rewards in High-Yield Bond ETF
13 Nov
Summary
- Investor shifts from 100% stocks to evaluating fixed income ETFs
- Discovers VanEck Fallen Angel High Yield Bond ETF (ANGL) with 6.20% yield
- Fallen angels offer lower credit risk and less correlation to stocks than typical junk bonds
In November 2025, a retired investor who had previously favored a 100% stock portfolio has shifted his focus to evaluating fixed income exchange-traded funds (ETFs) as a way to reduce portfolio risk. After interest rates surged a few years ago, the investor decided it was an opportune time to explore options for his individual retirement account (IRA).
Seeking higher levels of income, the investor's search led him to the VanEck Fallen Angel High Yield Bond ETF (ANGL), a $3.07 billion ETF that offers a 6.20% 30-day SEC yield. This is well in excess of what's found on aggregate or investment-grade corporate bond ETFs. Fallen angels, the bonds held by this ETF, are investment-grade corporates that have been downgraded to junk status, but the investor has discovered that they typically have higher credit ratings and lower correlation to stocks than traditional high-yield bonds.
Combining these factors, the investor has found the VanEck Fallen Angel High Yield Bond ETF to be an attractive addition to his portfolio, providing both higher income and diversification benefits compared to a standard junk bond fund. As the Federal Reserve rolled out its first rate cut of 2025 in the third quarter, fallen angels outperformed traditional junk bonds, further solidifying the investor's decision to allocate a portion of his IRA to this unique fixed income ETF.
