BKLN - SRLN: Better Alternatives Exist In The Leveraged Loan Space
2024-04-08 23:31:23 ET
Summary
- SPDR Blackstone Senior Loan ETF seeks to provide current income while preserving capital by investing in senior loans.
- SRLN is overweight in single-B leveraged loans and has a low concentration in CCC-rated loans.
- The Fund has poor analytics compared to its peers and has historically underperformed the leveraged loan index.
- SRLN does not come cheap, with the ETF commanding a 0.7% expense ratio, towards the top rate charged by the peer group.
- Leveraged loans are an attractive asset class until the Fed starts cutting rates.
Thesis
The SPDR Blackstone Senior Loan ETF ( SRLN ) is a fixed income exchange-traded fund. The vehicle comes with an interesting name, representing a play on 'Senior Loans', which constitutes the underlying collateral in this ETF:
SRLN: Better Alternatives Exist In The Leveraged Loan SpaceThe SPDR Blackstone Senior Loan ETF (the "Fund") seeks to provide current income consistent with the preservation of capital. In pursuing its investment objective, the Fund seeks to outperform the Markit iBoxx USD Liquid Leveraged Loan Index (the "Primary Index") and the Morningstar LSTA U.S. Leveraged Loan 100 Index (the "Secondary Index") by normally investing at least 80% of its net assets (plus any borrowings for investment purposes) in Senior Loans. For purposes of this 80% test, "Senior Loans" are first lien senior secured floating rate bank loans.