Seeking Alpha

Senior loan funds back up big claims

  • Marketing pitches about how senior loan and bank loan funds were the place to be in a period of rising interest rates are proving right. While many closed-end income funds went tumbling this summer, loan CEFs held up just fine, finds Fitch.
  • Senior or Bank loans are similar to high yield (HYG, JNK) except they have better credit and rate protection due to being higher up in the capital structure and being floating rate.
  • The most popular ETF is the PowerShares Senior Loan Portfolio (BKLN) and it's off 1.1% in the last 3 months vs. 3.4% for AGG (and BND). The actively-managed SPDR Blackstone/GSO Senior Loan ETF (SRLN) is off just 0.3%.
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