Angel Oak launches new active structured credit ETF

Nov 21st, 2022 | By | Category: Fixed Income

Angel Oak Capital Advisors, a fixed income specialist with more than $20 billion in assets under management, has launched its second actively managed fund investing in structured credit assets.

Ward Bortz, Head of ETFs at Angel Oak Capital Advisors

Ward Bortz, Head of ETFs at Angel Oak Capital Advisors.

The Angel Oak Income ETF (CARY US) has been listed on NYSE Arca with an expense ratio of 0.79%.

Structured credit products are created through a securitization process in which financial assets such as loans and mortgages are packaged into interest-bearing securities backed by those assets.

CARY will have a strong bias towards non-agency mortgage-backed securities which are expected to account for 60% of the fund’s total allocation. The remaining allocation will be comprised of asset-backed securities (including those backed by credit card receivables, student loans, automobile loans, and commercial real estate), collateralized loan obligations, US Treasuries, and corporate debt.

Security selection is driven by fundamental research with regard to maturity, yield, credit rating, collateral quality, credit support, structure, and market conditions. Angel Oak will aim to diversify risks that arise from position sizes, geography, ratings, duration, deal structure, and collateral values, while also seeking to invest in securities that have relatively low volatility.

The ETF may invest, without limitation, in securities of any maturity or duration.

Angel Oak made its ETF debut at the end of October by launching the Angel Oak UltraShort Income ETF (UYLD US). UYLD, which has an expense ratio of 0.29%, delivers a similar strategy as CARY but maintains a dollar-weighted average portfolio duration of less than one year.

Sreeni Prabhu, CIO at Angel Oak Capital Advisors, said: “We are excited to be delivering our second actively managed ETF in as many weeks. Our continued growth into the ETF space underscores our position as a front-runner in filling a gap in the structured credit market for investors.”

Ward Bortz, Head of ETFs at Angel Oak Capital Advisors, added: “There has rarely been an investment opportunity as compelling as what we are seeing today in US structured credit assets. We are at a time in the market when these income-driven solutions are needed and being sought after by investors. Angel Oak has been a pioneer in structured credit investing for over a decade, and I am excited to continue to grow the firm’s ETF business to help meet the needs of investors.”

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