FTSL: Senior Loan ETF, Good Dividend Yield, Below-Average Performance, And High Expense Ratio

(7min)

Summary

  • FTSL is a simple senior loan ETF, with an above-average 7.7% dividend yield.
  • Senior loans were one of the best-performing income investments of 2022 and 2023, with FTSL outperforming most of its peers.
  • Outperformance has diminished these past few months. Fed hikes and narrow credit spreads could pressure senior loans and FTSL further.
  • CLO debt ETFs look stronger than FTSL, with higher returns and lower credit risk.
  • This idea was discussed in more depth with members of my private investing community, CEF/ETF Income Laboratory. Learn More »

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Marina Demeshko

I last covered the First Trust Senior Loan Fund ETF (NASDAQ:FTSL) in late 2023. In that article, I argued that FTSL's high 0.87% expense ratio made it a worse investment than its senior loan peers. FTSL has slightly underperformed its

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This article was written by

Juan de la Hoz profile picture
10.34K Followers

Juan de la Hoz has worked as a fixed income trader, financial analyst, operations analyst, and as an economics professor. He has experience analyzing, trading, and negotiating fixed-income securities, including bonds, money markets, and interbank trade financing, across markets and currencies. He focuses on dividend, bond, and income funds, with a strong focus on ETFs.

Juan is a contributor to the investing group CEF/ETF Income Laboratory which is led by Stanford Chemist. Features of the service include: managed income portfolios (targeting safe and reliable ~8% yields) making use of high-yield opportunities in the CEF and ETF fund space. These are geared toward both active and passive investors of all experience levels. The vast majority of CEF/ETF Income Laboratory holdings are also monthly-payers, for faster compounding and steady income streams. Other features include 24/7 chat, and trade alerts. Learn More.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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