The ETF recently got some competition from Pyxis iBoxx Senior Loan (NYSEArca: SNLN). [Senior Bank Loan ETF Offers High-Yield Alternative]
BKLN holds $1.4 billion in assets. The fund has raked in net inflows of about $1.2 billion this year, according to IndexUniverse. It has quickly grown to become the third-largest speculative-grade debt ETF.
Bank loan ETFs are attracting flows amid concerns that junk bonds are losing momentum after more than doubling since 2008, Bloomberg reported recently. The spread between yields on bonds and loans has fallen to less than half the historic average amid the Fed’s bond-buying programs.
“Loans are a compelling asset class compared to high yield at these levels,” said Jason Rosiak, the head of portfolio management at Pacific Asset Management, in the Bloomberg story. [High-Yield Investors Moving Into Bank Loan ETFs]
In high-yield bonds, danger signs are flashing after a strong run, The Wall Street Journal reports, citing relatively low yields, a still-shaky economy, the U.S. fiscal cliff and Europe’s debt crisis.
“The price appreciation investors have enjoyed over the past few years might be over,” the WSJ reports. “As an alternative, some strategists recommend leveraged-loan funds.”
PowerShares Senior Loan Portfolio
