The Fund is one of the dedicated Fallen Angels investment vehicles in the market. It aims to generate a return in excess of the Bloomberg US High Yield Fallen Angel 3% Cap Total Return Index Value Unhedged (Benchmark) with similar levels of volatility over the medium to long-term before fees and expenses, whilst taking environmental, social and governance (“ESG”) factors into account.
When a company that has been rated investment grade by credit ratings agencies is downgraded below Baa3/BBB-, then it is commonly known as a “Fallen Angel”. The high yield market contains issues that are BB-rated, B-rated and CCC-rated. As they move down from investment grade, more than 70%1 of Fallen Angels are in the maximum BB-rated category.
1 Source: as at 31 March 2024, BNY Efficient U.S. Fallen Angels Beta Fund Factsheet, Credit Quality Breakdown.
WHY INVEST?
Figure 1 below demonstrates that from 2004 (when Fallen Angels were first measured) to the end of 2023, Fallen Angels could have better total and risk-adjusted returns relative to the broad high yield universe. Investors who want to exploit the potential of a company to recover from a temporary decline might consider fallen angels.
When a bond is downgraded to the high-yield universe, its price may decline. For instance, certain investment funds, such as index trackers that focus on investment-grade holdings, may be forced to exclude it from their portfolios. In the period following the demotion, if there are more sellers than buyers in the market, the principles of supply and demand mean that the bond’s price could be pushed below its true value.
Figure 2 shows that, between October 2004 and June 2023, US Fallen Angels that lost their investment-grade status achieved, in aggregate, relatively better performance during the 12 calendar months following their respective demotions to the high-yield market.
Over the period December 2004 to June 2024, the average annual default rate of Fallen Angles was 1.73% compared to 2.51% for other high-yield bonds. The Fallen Angels average annual default rate has been lower than the broader high-yield market. What’s more, as shown in Figure 4, the gaps2 indicated the periods when there were no Fallen Angel defaults.
Aims to pay monthly dividend of ~7%* on goss basis.
*Based on share class USD N (Inc.) (M), average annualised dividend yield from January 2023-March 2024. Dividend amount or dividend rate is not guaranteed. The dividends (if any) may fluctuate from time to time. Distributions may be paid out of capital.
Offers investors access to an asset class with fewer dedicated investment options than more well-established financial categories.
Levies a management fee similar to passive approaches; mitigating barriers to entry through innovative and cost effective bond trading.
Available share classes
| Share Class | Minimum initial investment | ISIN | Bloomberg code | Launch Date | Factsheet |
| HKD N (ACC.) | HKD 50,000 | IE000ERI9SY7 | BEUFANH ID | 22 January 2024 |  |
| HKD N (Inc.) | HKD 50,000 | IE000RIGD9Y9 | BEUFNHI ID | 22 January 2024 | |
| USD A (Acc.) | USD5,000 | E00BM94ZD48 | BUSFAAU | 21 September 2020 | |
| USD N (Acc.) | USD5,000 | IE00061KXGP8 | BNFANUA | 13 August 2021 | |
| USD N (Inc.) (M) |
USD5,000 | E000BJM58Z9 | BNFANUI | 13 August 2021 | |
| USD SY (Inc.) (M) | USD5,000 | IE0004X1VRH1 | BEUFSIM ID | 21 September 2020 | |
* Please note that each SFC-authorized subfund of BNY Mellon Global Funds, plc is not aiming to incorporate ESG factors as its key investment focus and, as such, does not constitute an ESG fund pursuant to the Circular to management companies of SFC-authorized unit trusts and mutual funds – ESG funds issued by the SFC on 29 June 2021. Other funds which are not authorized for offering to retail investors may or may not constitute ESG funds (where defined in the relevant local jurisdiction).
Past performance is not indicative of future performance. The value of investments and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements. When you sell your investment you may get back less than you originally invested. The value of investments may go down or up.
WARNING
This material is for retail investors and is not intended as investment advice. Investment involves risk. Past performance is not a guide to future performance. The offering document of the fund(s) and the Key Facts Statements (KFS) should be read for further details including the risk factors, in particular (where relevant) those associated with investments in emerging markets or using financial derivative instruments for investment purposes. Past performance information presented is not indicative of future performance.
Investment returns may be exposed to exchange rate fluctuations. The value of investments may go down or up. This document has not been reviewed by the Securities and Futures Commission. You should not rely on this document alone to make investment decisions. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice. This document may not be used for the purpose of an offer or solicitation in any jurisdiction or in any circumstances in which such offer or solicitation is unlawful or not authorised. This material should not be published or distributed without due authorization from issuer. No warranty is given as to the completeness of this information and no liability is accepted for omissions in such information. The Fund is a subfund of BNY Mellon Global Funds, plc (BNY MGF), an open-ended investment company with variable capital (ICVC) with segregated liability between sub-funds. Incorporated with limited liability under the laws of Ireland and authorised by the Central Bank of Ireland as a UCITS fund. The Fund may not be registered for sale in some markets.
In Hong Kong, the issuer of this document is BNY Mellon Investment Management Hong Kong Limited, which is registered with the Securities and Futures Commission (Central Entity Number: AQI762). This document has not been reviewed by the Securities and Futures Commission. Information in this document is subject to change without notice. To the extent permitted by applicable laws, rules, codes and guidelines, BNY Mellon Investment Management Hong Kong Limited accepts no liability whatsoever whether direct or indirect that may arise from the use of or reliance on the information contained in this document. The information has been provided without taking into account the investment objective, financial situation or needs of any particular person. To the extent permitted by applicable laws, rules, codes and guidelines, BNY Mellon Investment Management Hong Kong Limited and its affiliates are not responsible for any subsequent investment advice given based on the information supplied. BNY Mellon Investment Management Hong Kong Limited and any other BNY Mellon entity mentioned are ultimately owned by The Bank of New York Mellon Corporation.
AP4180-25-04-2024 (12M)
CONTACT US | +852 3926 0600 | cs.im.apac@bny.com