First Actively Managed Senior Loan ETF Launches

  • State Street, Blackstone backing the new fund
  • ETF is designed to outperform its index
  • Passively managed funds have lower expenses

The leveraged loan world welcomed the first ever actively managed exchange traded fund focused on senior bank loans on April 4, sister service Thomson Reuters Loan Pricing Corp. reported. State Street Corp. and The Blackstone Group’s new senior loan ETF began trading April 4 on the NYSE Arca under the symbol SRLN.

“Given the high turnover of senior loans and the critical importance of credit selection, we believe an active strategy provides a key advantage to investors who want access to this corner of the market,” said James Ross, global head of SPDR Exchange Traded Funds at State Street Global Advisors in a press statement.

The new ETF is designed to outperform the Markit iBoxx USD Liquid Leveraged Loan Index and the S&P/LSTA U.S. Leveraged Loan 100 Index. The two other ETFs focused on senior loans are passively managed. Invesco PowerShares tracks the S&P/LSTA U.S. Leveraged Loan 100 Index and Pyxis iBoxx follows the Markit iBoxx USD Liquid Leveraged Loan Index.

Loan ETFs have been on a tear this year, with the first mover Invesco PowerShares now housing $3.04 billion in assets under management.

State Street and Blackstone’s SRLN will charge an expense ratio of 0.90 percent, which is lower than the average expense ratio of senior loan mutual funds but higher than the passively managed loan ETFs in the market. Pyxis’ SNLN has an expense ratio of 0.55 percent while Invesco’s BKLN charges 0.65 percent management fee and a 0.01 percent acquired fund fee.

“SSgA is a pioneer in the ETF market and we are pleased to join them in bringing the first actively managed senior loan ETF to investors,” said Lee Shaiman, a managing director at The Blackstone Group.

Lisa Lee is a senior correspondent for Thomson Reuters LPC.