What Active Senior Loan ETFs Bring to the Table
December 20th, 2013 at 8:00am by Max Chen
As the three-decade long bull rally in the fixed-income market fades and interest rates start to inch higher, investors are increasingly turning to alternative bond exchange traded fund strategies, such as senior floating rate bank loans, to protect income generation and hedge rate risk.
ETF Trends’ Tom Lydon sat down with David B. Mazza, Vice President, Head of ETF Investment Strategy for State Street Global Advisors, at the Charles Schwab IMPACT 2013 conference in Washington, D.C. to discuss the benefits of an active senior loan ETFs and how advisors are utilizing the strategy. [Bank Loan ETFs Continue to Thrive]
“At the end of a thirty year bull run in fixed-income, senior loans are an excellent way of addressing that,” Mazza said.
State Street offers the actively managed SPDR Blackstone/GSO Senior Loan ETF (NYSEArca: SRLN), which has a 77 day weighted average waiting period before the floating coupon rate is reset and offers a 2.87% 30-day SEC yield.
“Some of the ways advisors are using [SRLN] is carving out a portion of their fixed-income allocations and say, ‘I want a strategy which is going to be more resilient to a rising rate environment. I want one that will respond to changes in interest rates,’” Mazza said.
Watch the video below to see the full interview with David Mazza.
To view past video interviews, visit our video section.