Fixed income specialist Angel Oak Capital Advisors has converted two of its mutual funds, which provide exposure to mortgage-backed securities (MBS) and high yield bonds, into actively managed ETFs.
Sreeni Prabhu, Group Chief Investment Officer at Angel Oak.
The $30 million Angel Oak Mortgage-Backed Securities ETF (MBS US) and $70m Angel Oak High Yield Opportunities ETF (AOHY US) have been listed on NYSE Arca with expense ratios of 0.49% and 0.55%, respectively.
MBS and AOHY effectively double Angel Oak’s dedicated ETF platform, joining two ETFs introduced in 2022 that provide broad maturity or ultra-short duration exposure diversified across various structured credit markets.
These funds are the $120m Angel Oak Income ETF (CARY US) and $130m Angel Oak UltraShort Income ETF (UYLD US) which have expense ratios of 0.79% and 0.29%, respectively.
Sreeni Prabhu, Group Chief Investment Officer at Angel Oak, commented: “We continue to be pleased with the response of our actively managed ETF products, and the latest conversions show our commitment to providing investors with unique options for income-driven solutions within the structured credit space. As leaders in structured credit investing, we’re dedicated to aligning our leading-edge solutions with investors’ goals.”
Ward Bortz, Head of Distribution for US Wealth at Angel Oak, added: “The successful conversion of these ETFs demonstrates Angel Oak’s emerging leadership in both the ETF landscape and, critically, in securitized credit investing. Investors coming over the hill of the recent bond bear market acknowledge the increased appeal of securitized credit and its potential returns, driving forward demand for these strategies. The debut of MBS and AOHY ETFs is Angel Oak’s next step forward in bringing our top-of-the-line, innovative strategies to investors in the market for accessible, liquid investment vehicles.”
MBS
Angel Oak highlights that this fund stands out from other MBS ETFs, which are generally passively managed and focus solely on agency residential credit. Moreover, the ETF is designed with the flexibility to adopt defensive stances in times of market volatility, with options to allocate its entire portfolio to cash or high-quality short-term instruments as a safeguard.
High yield
The Angel Oak High Yield Opportunities ETF offers a distinct approach within the high-yield bond market, backed by a solid 15-year history of performance. It targets higher-quality bonds rated from BB+ to B- and includes exposure to securitized credit assets, standing out in a sector often dominated by homogenous, passive funds.
The fund’s flexible investment strategy allows for holdings across any range of maturities and durations, typically aiming for a dollar-weighted average maturity between two to fifteen years. Managed by a team with over 25 years of expertise in both corporate and securitized debt markets, and responsible for steering the firm’s Morningstar five-star rated high-yield bond fund since 2009, the ETF brings seasoned leadership to investors seeking diversified high-yield exposure.