Bank loan ETFs have attracted investors looking for decent yield with some protection against rising interest rates since the funds invest in floating-rate securities.
The asset class has grown so popular that investors can now choose between passive, index-based ETFs or active strategies for senior loans. [Why Bank Loan ETFs are Booming]
PowerShares Senior Loan Portfolio (NYSEArca: BKLN) is the largest ETF in the category with assets of $4.4 billion. It also one of the best-selling ETFs this year with net inflows of $3 billion, according to IndexUniverse data. The fund is based on an index.
Highland/iBoxx Senior Loan ETF (NYSEArca: SNLN) is also index-based.
Meanwhile, First Trust Senior Loan Fund (NasdaqGM: FTSL) and SPDR Blackstone/GSO Senior Loan ETF (NYSEArca: SRLN) are actively managed.
Some investors are opting for an active approach in their bank loan ETF.