FALN vs SPHY

FALNBiShares Fallen Angels USD Bond ETF

SPHYAState Street SPDR Portfolio 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.

SPHY State Street's junk-bond workhorse: roughly 1,900 US high yield bonds in one wrapper for 0.05% a year, a fraction of what the typical high yield ETF charges, with income paid 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.

SPHY The fund seeks to track, before fees and expenses, the price and yield performance of the ICE BofA US High Yield Index.

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.

• SPHY 0.05% a year against a peer-group median about eight times higher. In high yield, the fee comes straight out of coupon income, so the gap does real work.
• Holds about 1,900 bonds tracking the ICE BofA US High Yield Index, broad enough that no single issuer's trouble dominates the portfolio.ssga.com
• Live since 2012, a multi-billion-dollar fund that trades actively and has stuck tightly to its stated index rather than drifting from the mandate.
• Distributions arrive monthly, in step with how the underlying coupons come in.

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.

• SPHY This is below-investment-grade credit. Defaults and spread moves drive the price far more than Treasury yields do, and sell-offs in this asset class can be sharp.
• Fees here are already near the floor: SCYB lists 0.03% and HYLB matches at 0.05%, so the cost edge over the strongest peers is narrow.
• Scope is US high yield corporates, full stop. No investment-grade ballast, no emerging market debt, nothing to soften a credit drawdown from inside the fund.ssga.com

Full FALN profile⁠

Full SPHY profile⁠