FALN vs USHY

FALNBiShares Fallen Angels USD Bond ETF

USHYAiShares Broad USD High Yield Corporate 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.

USHY The wide-angle lens on junk bonds: about 1,900 US dollar high yield corporate issues for 0.08% a year, a fifth of what the typical fund in its category charges. Broad, cheap, heavily traded, and it pays 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.

USHY The fund seeks to track an index of U.S. dollar-denominated high yield corporate bonds.

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.

• USHY Charges 0.08% a year while the median high yield fund in its cohort runs 0.40%. Cheap rent on an expensive-to-run corner of the bond market.
• Holds about 1,900 bonds against the ICE BofA US High Yield Constrained Index: the broad market, not a curated slice of the most liquid names.ishares.com
• A multi-billion-dollar fund and one of the more actively traded in high yield, which tends to keep bid-ask spreads thin even on busy days.
• Pays monthly and has tracked its index tightly since its 2017 launch, one of the closer index matches in its peer group.

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.

• USHY High yield means below-investment-grade borrowers. When credit gets stressed this asset class drops with stocks instead of cushioning them.
• Cheaper tickets sit on the same shelf: SCYB at 0.03% and SPHY at 0.05%.
• This is a fund, not a bond ladder. No maturity date hands your principal back; the basket rolls on indefinitely.

Full FALN profile⁠

Full USHY profile⁠