Another Senior Loan ETF in the Works (BKLN)
Pyxis Funds, the Texas-based registered investment adviser with 21 funds under management, has filed plans with the Securities and Exchange Commission to introduce the Pyxis/iBoxx Liquid Loan ETF (NASDAQ: LQLN).
The new Pyxis fund may invest all or substantially all of its assets in Senior Loans to Borrowers having outstanding debt securities rated below investment grade by a NRSRO and unrated debt securities of comparable quality," according to a filing with the SEC.
Senior loans, which are typically less sensitive to interest rate risk, are usually privately arranged through private transactions. In a typical Senior Loan, the Agent administers the terms of the Loan Agreement and is responsible for the collection of principal and interest and fee payments from the Borrower and the apportionment of those payments to the credit of all Lenders that are parties to the Loan Agreement., according to the Pyxis filing.
The concept of senior loans in ETFs has already proven viable. The PowerShares Senior Loan Portfolio (NYSE: BKLN), which was introduced in March 2011, has almost $583 million in assets under management. BKLN features a 30-day SEC yield of 5.36 percent and a 12-month trailing yield of 4.93 percent. That fund pays a monthly dividend, which Pyxis said it plans to do with its new senior loan fund.
LQLN will be the first ETF listed by Pyxis. The filing did not include an expense ratio for the new fund. BKLN charges fees of 0.76 percent per year.
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