The markets are looking for the economy to come in for a soft landing. And sure, that means equities will likely continue to do well. But it’s also important to reserve parts of one’s portfolio for investments other than stocks, especially when that economic plane lands softly.
Diversifying one’s portfolio in this way ensures that if the market takes a downturn, you’ll always have something other than equities that could rise. The SPDR Blackstone Senior Loan ETF (SRLN) is one such exchange-traded fund (ETF) to consider, since it invests in something that will always be around: debt!
Founded in 2013 by State Street Global Advisors, SRLN provides actively managed exposure to non-investment-grade, floating-rate senior secured debt from both U.S. and non-U.S. corporations that resets in three months or less. The fund employs an actively managed approach to the senior loan ETF space. That strategy has allowed SRLN to offer an investment largely uncorrelated to the stock market since its launch.
SRLN does not track an underlying index. Instead, the fund aims to outperform competing ETFs through two means. First, SRLN seeks to anticipate which credits will be added and dropped from the indexes to buy and sell accordingly. Second, it does not limit itself to only the debt of U.S. firms.
Currently, SRLN has $4.47 billion in assets under management and has an expense ratio of 0.70%. Its current top holdings include the Medline Borrower Lp Term Loan B 23-Oct-2028, the Peraton Corp Term Loan B 01-Feb-2028, the Mcafee Corp Term Loan B-1 01-Mar-2029 and the U.S. Dollar.
Chart courtesy of www.stockcharts.com
SRLN’s value has been steadily growing over the past year, as the fund is now trading above its 50- and 200-day moving averages. The fund has seen modest gains, having risen 0.75% in the past month, 3.19% in the past three months and 6.52% year to date, as of the market’s close on Aug. 7.
While an investment in debt might be good, burdening yourself with a personally bad investment is not. Remember to always consider your personal financial situation and goals before making any investment. Investors are always encouraged to do their due diligence before adding any stock or ETF to their portfolios.
I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You may just see your question answered in a future ETF Talk.