Virtus SEIX Senior Loan ETF

SEIX

Market cap $249M

Treasury yields surge as U.S.-Iran tensions lift oil prices. These ETFs could help investors navigate a rising-rate environment.

Virtus Seix Senior Loan ETF offers classic leveraged loan exposure, overweight single-B credits, and has demonstrated consistent outperformance versus BKLN. SEIX maintains low volatility and drawdowns outside of COVID, but currently yields a modest 6.5% SEC yield. Leveraged loan spreads are at long-term averages, offering no clear buy or sell signal; fundamental deterioration is a growing concern.

The Virtus Seix Senior Loan ETF (Fund) returned 2.02% in the third quarter, bettering its benchmark, the S&P UBS Leveraged Loan Index, which returned 1.68%. The Fund's top positive contributors by sector were automotive, food/tobacco, and financials. The Fund's top negative contributors by sector were information technology, healthcare, and consumer durables.

An upbeat job market and moderately cooling inflation may prevent the Fed from opting for significant rate cuts in the near future.

The Fed's Neel Kashkari believes that it's likely that the Fed will cut interest rates once in 2024, possibly in December.

Virtus Seix Senior Loan ETF is an actively managed fund that invests in senior-secured, floating-rate leveraged loans, aiming to generate high levels of current income. The SEIX ETF has a well-diversified portfolio with investments spread across over 140 different loans and securities, minimizing credit risk from individual issuers. Compared to similar ETFs, SEIX has consistently delivered better returns with less volatility and has a reasonable expense ratio, making it a compelling choice for investors.

Stocks slumped to start Q2 as an interest rate cut by the Fed may come later than anticipated before. Investors can rely on these ETF strategies to play rising yields.

SEIX is an actively managed senior loan ETF. The fund offers investors a strong 8.9% yield and performance track-record, both better than those of its peers. Although yields will almost certainly drop as the Fed cuts rates, these should remain competitive to those of most bonds, including high-yield bonds.

The Virtus Seix Senior Loan ETF stands out relative to larger peers due to its superior historical performance and smaller size. SEIX charges a reasonable expense ratio compared to peer funds. SEIX has delivered downside protection for investors during challenging risk-off environments historically.