Even though the “Bank Loan” niche only has four funds populating it presently, there is clearly potential in terms of investor demand here judging by BKLN’s lofty asset base, and noting that the fund debuted back in 2011 and has built a loyal following since then.
Three of the four funds in this space are north of $1 billion in terms of AUM size, including BKLN, with actively managed SRLN (SPDR Blackstone/GSO Senior Loan, Expense Ratio 0.70%, $1.8 billion in AUM) and FTSL (First Trust Senior Loan, Expense Ratio 0.86%, $1.3 billion in AUM) impressively raising their asset levels to date. Having only debuted back in 2013, these two funds have given BKLN a two year head start.
In fact, with only four funds in the space presently there is no “small” or “irrelevant” offering in the space as the $551 million SNLN (Highland iBoxx Senior Loan, Expense Ratio 0.55%) certainly has attained a respectable asset level considering it is the only fund from issuer Highland Capital Management. SRLN and FTSL have reeled in $745 million and $523 million respectively year-to-date, and SNLN a much lesser $83 million during this time frame.
Regardless, there is obviously investor appetite across the board for these funds and this segment in general, which basically has been the steady trend since these funds debuted several years back and there is likely opportunity for new entrants and perhaps new approaches here given the momentum. PowerShares’ website in regards to BKLN points out the following in terms of what may very well make Bank Loans within an ETF wrapper a hit among investors: “1) Yield – Floating rate loans offer attractive current income potential. 2) Senior Status – Secured bank loans are senior to other claims 3) Less rate sensitivity – Floating rates mean less interest rate sensitivity.”
Presently we see a Yield-to-Maturity in BKLN of 4.66%. The fund has pulled back a bit from its late July highs and continues to pivot around its 50 day MA lately.
The PowerShares Senior Loan Portfolio (NYSE:BKLN) was trading at $23.11 per share on Tuesday afternoon, down $0.01 (-0.04%). Year-to-date, BKLN has gained 1.20%, versus a 12.79% rise in the benchmark S&P 500 index during the same period.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.