Angel Oak Capital Advisors, LLC, an investment management firm that specializes in value-driven structured credit investing, announced the completed conversions of two of its mutual funds to exchange-traded funds. The Angel Oak High Yield Opportunities Fund, which, as of 1/31/24, received a 5-Star Overall Morningstar Rating based on risk-adjusted returns out of 614 high yield bond funds, and the Angel Oak Total Return Bond Fund are ETFs as of February 16. The funds’ new names are Angel Oak High Yield Opportunities ETF (NYSE: AOHY) and Angel Oak Mortgage-Backed Securities ETF (NYSE: MBS), respectively.
The conversion underscores the positive momentum for Angel Oak’s ETF platform since launching in November of 2022. MBS and AOHY recently joined Angel Oak’s Income ETF (NYSE: CARY) and UltraShort Income ETF (NYSE: UYLD). The firm’s four ETFs combined have approximately $350 million in assets under management, and the firm’s ETF platform, including its sub-advisory services, has approximately $500 million in AUM. Angel Oak plans to broaden the new ETFs’ availability to its core investor audience; both MBS and AOHY will be available on major custodial platforms as well as wirehouse and independent broker-dealer platforms.
“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,” said Sreeni Prabhu, managing partner and group chief investment officer for Angel Oak. “As leaders in structured credit investing, we’re dedicated to aligning our leading-edge solutions with investors’ goals.”
The MBS ETF will be an actively managed, pure-play residential mortgage credit ETF seeking to deliver stable income and price appreciation through both agency and non-agency residential mortgage-backed securities (RMBS). The specific RMBS focus separates this ETF from others in the market whose exposure to residential credit, if any, is typically offered via passive exposure to agency mortgage-backed securities. The fund is backed by Angel Oak’s team of RMBS experts, which has been investing in this area for more than 15 years.
The AOHY ETF has a strong track record, spanning approximately 15 years, of providing investors with a differentiated approach in the high-yield sector. This actively managed ETF seeks to invest in higher-quality, high-yield corporate bonds and securitized credit assets — a rarity among high-yield ETFs, which tend to be homogenous and benchmark trackers. Angel Oak has appointed a seasoned team of portfolio managers to lead the fund. They have more than 25 years of experience navigating corporate and securitized debt and have overseen the firm’s five-star Morningstar-rated high-yield bond fund since 2009.
“The successful conversion of these ETFs demonstrates Angel Oak’s emerging leadership in both the ETF landscape and, critically, in securitized credit investing,” said Ward Bortz, ETF portfolio manager and the head of distribution for U.S. wealth for Angel Oak. “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.”
To learn more about Angel Oak’s ETF offerings, click here.
About Angel Oak Capital Advisors, LLC
Angel Oak is an investment management firm focused on providing compelling fixed-income investment solutions to its clients. Backed by a value-driven approach, Angel Oak seeks to deliver attractive, risk-adjusted returns through a combination of stable current income and price appreciation. Its experienced investment team seeks the best opportunities in fixed income, with a specialization in mortgage-backed securities and other areas of structured credit.
Net Total Returns as of 12/31/23 | 1 YR | 3 YR | 5 YR | 10 YR |
Angel Oak High Yield Opportunities Fund Instl. (ANHIX) | 12.54% | 3.32% | 5.73% | 4.95% |
Bloomberg U.S. Corporate High Yield Index | 13.44% | 1.98% | 5.37% | 4.60% |
Current performance may be lower or higher than performance data quoted. Performance quoted is past performance and is no guarantee of future results. The investment return and principal value of an investment in a fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance to the most recent month end can be obtained by calling 855-751-4324 or by visiting angeloakcapital.com.
The Angel Oak High Yield Opportunities ETF is the Successor Fund to The Angel Oak High Yield Opportunities Fund, which was reorganized into the ETF on 2/16/24. As a result of the conversion, the Fund adopted the accounting and performance history of its predecessor mutual fund. Performance results shown prior to 2/16/24, reflect the performance of the predecessor mutual fund. The NAV returns shown prior to 2/16/24 reflects the NAV of predecessor mutual fund’s Institutional shares. Performance for the mutual fund has not been adjusted to reflect the ETF’s expenses. Had the mutual fund been structured as an ETF, its performance may have differed. The ETF has the same investment objective and investment strategy as the mutual fund, and performance of the ETF may differ from that of the Fund. On 12/31/22, changes were made to the Fund’s investment strategies; performance during period prior to this date may have differed had the Fund’s current strategies been in place at those times.
The inception date of the High Yield Opportunities Fund I Class (ANHIX) was 3/31/09. Gross and net expense ratios (0.99% and 0.56%, respectively) are reported as of the 5/31/23 prospectus. The Adviser has contractually agreed to waive its fees to limit the Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursement to 0.55% of the Fund’s average daily net assets through 5/31/24.
AOHY | MBS | |
Gross Expense Ratio* | 0.55% | 0.79% |
Net Expense Ratio* | 0.55% | 0.49% |
*Gross and net expense ratios are reported as of the 1/19/24 prospectus. For MBS, the Adviser has contractually agreed to waive its fees to limit the Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursement to 0.49% of the Fund’s average daily net assets through 9/30/25.
As of 1/31/24, the Angel Oak High Yield Opportunities Fund (ANHIX) received a Morningstar rating based on risk-adjusted returns of 5 stars overall, 4 stars for the three-year period, 4 stars for the five-year period, and 5 stars for the ten-year period among 614, 614, 581, and 434 high yield bond funds. The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10- year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.
Bloomberg U.S. Corporate High Yield Index: An unmanaged market value-weighted index that covers the universe of fixed-rate, non-investment grade debt.
Investors should carefully consider the investment objectives, risks, charges and expenses of the funds. This and other important information about the funds is contained in the Prospectus which can be obtained by calling Shareholder Services at 855-751-4324 or from www.angeloakcapital.com. The Prospectus should be read carefully before investing.
Investing involves risk; principal loss is possible. Investments in debt securities typically decrease when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in lower-rated and nonrated securities present a greater risk of loss to principal and interest than higher-rated securities do. Investments in asset-backed and mortgage-backed securities include additional risks that investors should be aware of, including credit risk, prepayment risk, possible illiquidity, and default, as well as increased susceptibility to adverse economic developments. Derivatives involve risks different from—and in certain cases, greater than—the risks presented by more traditional investments. Derivatives may involve certain costs and risks such as illiquidity, interest rate, market, credit, management, and the risk that a position could not be closed when most advantageous. Investing in derivatives could lead to losses that are greater than the amount invested. The Fund may use leverage, which may exaggerate the effect of any increase or decrease in the value of securities in the Fund’s portfolio or higher and duplicative expenses when it invests in mutual funds, ETFs, and other investment companies. The Funds are a recently organized investment company with limited operating history. As a result, prospective investors have a limited track record or history on which to base their investment decisions. For more information on these risks and other risks of the Fund, please see the Prospectus.
ETFs may trade at a premium or discount to NAV. Shares of any ETF are bought and sold at market prices (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. The Fund is an actively managed ETF, which is a fund that trades like other publicly-traded securities. The Fund is not an index fund and does not seek to replicate the performance of a specified index.
The Angel Oak Funds are distributed by Quasar Distributors, LLC.
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