Moving down the spectrum, ANGL appears to fall in between PHB and HYG/JNK in terms of characteristics. Once again, the return stream follows suit:
Given that the hot button topic surrounding high yield (particularly in the recent downward pressure) is the underlying energy exposure, I would be remiss not to highlight the differences in said exposure between all the aforementioned names with an industry-level breakdown:
While the overall energy exposure is not significantly different, there are a few deviations. An example is that the crossover names have a slightly higher pipeline exposure from the inclusion of the names rated BBB.
While there is a sense of trepidation surrounding the high-yield market, particularly in the recent sell-off, there is a spectrum of names available that lend themselves to a higher-quality high-yield exposure. Whether it is from inclusion of securities rated BBB, a different weighting scheme or a more limited high-yield constituent universe, those looking for exposure do not have to rely on only broad high-yield ETFs.
At the time this article was written, Stadion held long positions in QLTB. The above constitutes the personal, professional opinion of Clayton Fresk, CFA, and does not reflect the views of Stadion Money Management LLC. References to specific securities or market indexes are not intended as specific investment advice. Founded in 1993, Stadion Money Management is a privately owned money management firm based near Athens, Georgia. Via its unique approach and suite of nontraditional strategies with a defensive bias, Stadion seeks to help investors—through advisors or retirement plans—protect and grow their “serious money.” Contact Stadion at 800-222-7636 or www.stadionmoney.com.