Many have also associated bank loan securities with “junk” bonds. However, bank loans are relatively safer, as they are usually secured by collateral like equipment, real estate or accounts receivables. [Bank Loan ETF Pays 5% Yield]
“Bank loans are considered safer than traditional high-yield bonds because the secured collateral protects the investor in a default,” according to Morningstar analyst Timothy Strauts.
For more information on fixed-income funds, visit our bond ETFs category.
Max Chen contributed to this article.
Story updated to correct name and expense ratio of planned bank loan ETF.