SPDR Blackstone Senior Loan ETF

SRLN

Market cap $6.86B

SRLN offers an 8% yield via diversified senior secured floating-rate loans, but most holdings are below investment grade, adding a certain degree of credit risk. Income and performance are highly sensitive to Federal Reserve rate policy; rate cuts could reduce distributions and loan values. SRLN stands out for liquidity and scale among peers, but higher fees and long-term underperformance are notable drawbacks.

SRLN, a senior secured floating rate loan ETF, offers high current income but faces challenges in the current economic environment, potentially leading to flat or negative returns. SRLN has lower costs, higher AUM, and competitive performance compared to peers, but narrowing credit spreads and rising default risks are concerning. Economic contraction and rising inflation suggest an uncertain outlook for interest rates, cuts will come, though perhaps with a delay.

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SRLN is an actively managed ETF focusing on senior secured variable rate loans from non-investment grade companies, with a diverse portfolio across sectors. Recent Fed cuts should cause the fund's dividend yield to decline, likely below those of high-yield corporate bonds. Cuts are a significant headwind for the fund, and a dealbreaker for me.

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