FALN vs SCYB

FALNBiShares Fallen Angels USD Bond ETF

SCYBASchwab High Yield Bond ETF

In short

FALN Downgrades are the shopping list. FALN holds dollar bonds that were investment grade until the ratings cut, keeps any one issuer to 3% of the index, and charges 0.25% for it. Roughly 160 bonds, income paid monthly.

SCYB Three basis points for the broad US high-yield corporate market. Schwab undercuts a category where the typical fund charges more than ten times as much, spreading the bet across roughly 1,800 bonds and paying monthly.

Stated mandate

FALN The Fund seeks to track an index of U.S. dollar-denominated high-yield corporate bonds that were previously rated investment grade.

SCYB The fund follows a rules-based strategy intended to track the high-yield bond market, primarily through bonds in the Bloomberg Barclays US Corporate High Yield Total Return Index and similar derivatives.

Why people hold it

• FALN The whole idea: every bond here started life investment grade and got cut to junk. That is a different slice of high yield than a plain market-weighted junk index.ishares.com
• 0.25% a year, below what the typical high-yield ETF charges, for a screen that most junk-bond funds do not run.
• The index caps any single issuer at 3%, so one blown-up borrower cannot swamp the roughly 160-bond basket.
• Running since 2016, now a multi-billion-dollar iShares fund that tracks its index closely. One of the stronger builds in the high-yield group.

• SCYB 0.03% a year against a category median of 0.40%. Even the cheap rivals sit above it: SPHY at 0.05%, USHY at 0.08%.
• Tracks the same Bloomberg US Corporate High Yield index as BKHY, which charges 0.22%. Same map, cheaper toll.
• Roughly 1,800 bonds, so no single issuer's blowup drives the outcome. Rules-based and passive, and it has hugged its index closely.
• A multi-billion-dollar fund that trades actively and pays monthly, which matters in a corner of the market where getting out cheaply is half the job.

Worth knowing

• FALN Still junk debt. When credit spreads widen, these bonds fall with the rest of high yield, and the ride is bumpier than investment-grade credit.
• Downgrade waves are lumpy. The basket fills with whichever industry is getting cut, so the sector mix can look nothing like a broad high-yield fund.
• Broad high-yield rivals such as SCYB and SPHY charge single-digit basis points. The fallen-angel screen costs extra.

• SCYB High yield means below-investment-grade credit. These bonds behave more like stocks than Treasuries when the economy sours, and the extra income is the payment for that risk.
• Launched in 2023, so it has a shorter record than rivals that have traded through more credit cycles.
• The strategy can hold derivatives alongside the bonds themselves to track the index, one layer beyond plain bond ownership.

Full FALN profile⁠

Full SCYB profile⁠