Daol Asset Management launched the ‘Daol BNY US Fallen Angel High Yield’ fund on the 11th, which invests in bonds that have lost their investment-grade rating (Fallen Angel) in the U.S. market.
This is a fund of funds investing in the ‘BNY Mellon Efficient U.S. Fallen Angels Beta Fund’ managed by Insight Investment, a subsidiary of BNY Mellon, a U.S.-based asset manager. It is a large asset manager ranked within the top 10 in the U.S., managing assets worth $2 trillion as of the end of last year.
Fallen Angel bonds refer to bonds of companies that have been downgraded from investment-grade to high-yield ratings. Most of these high-yield bonds are BB-rated, which have relatively higher credit ratings, allowing investors to expect higher returns with lower risk.
The Daol BNY US Fallen Angel High Yield fund primarily generates income from the high interest payments of the bonds and aims for additional gains from valuation profits arising from changes in the bonds’ credit ratings.
Kim Seongsan, Head of Retail Marketing at Daol Asset Management, stated, "When financially sound investment-grade bonds are temporarily downgraded to high-yield ratings due to economic events, their prices experience significant discounts. The core strategy of the fund is to purchase these bonds at low prices when they are extremely undervalued and hold them for an appropriate period."
In fact, the market returns of Fallen Angel bonds have historically outperformed the general high-yield bond market returns around major events such as the U.S. financial crisis, the Eurozone debt crisis, and the COVID-19 pandemic.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
