Consider Bond ETFs as Rates Rise

The actively managed bank loan ETF options could provide investors with better exposure as a manager is more freely able to weave in and out of the fixed-income market. For instance, Blackstone/GSO, which subadvises SRLN, is backed by one of the largest senior loan asset managers in the world.

SRLN holds 283 bonds with an average maturity of 5.66 years. The ETF has a 30-day SEC yield of about 4%. Most of SRLN’s holdings carry junk ratings as about 68% of the fund’s lineup are rated BB-, B or B+.

“With a fund like the SPDR Blackstone / GSO Senior Loan ETF (SRLN), investors may be able to seek income generation opportunities while potentially mitigating cyclical credit risks,” adds State Street.

For more information on the credit market, visit our bond ETFs category.