Exchange Traded Funds (ETFs)

The Debtor Creates Opportunity for the Investor

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.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.