SPDR Blackstone Senior Loan ETF SRLN boasts a seasoned leadership duo and large supporting cast, but its repeated portfolio shifts based on top-down views make it difficult to outperform consistently over the long term. It earns a Morningstar Medalist Rating of Neutral. 
Managers Daniel McMullen, Bonnie Brookshaw, and Gordon McKemie lean on a sizable group as they steer this strategy. The U.S.-based credit research team consists of 27 members, and the squad is backed by Blackstone's extensive industry footprint, which provides advantages versus smaller competitors.    
The group's basic investment approach is sound, but its significant portfolio shifts among credit-quality tiers have not led to consistent success within its bank loan Morningstar Category. The strategy is focused on the most liquid segment of the bank-loan market, with the objective of beating similar approaches that are passively managed and its IHS Markit iBoxx USD Liquid Leveraged Loan Index benchmark. 
At times, the team has maintained a conservative credit-risk posture, which has both hurt and helped the strategy, as it did during 2016’s high-yield market rally and 2020’s first-quarter coronavirus-related selloff, respectively. 
Management deviated from this conservative posture through late 2020 and early 2021 as it ratcheted up exposure to debt rated CCC and below to roughly 17% of assets as of March 2021, more than triple the typical rival’s stake, partially owing to views that ratings agencies were too quick to downgrade certain issuers during the coronavirus-triggered turmoil. 
The team tempered this stance one year later as heightened geopolitical risks prompted it to turn cautious. The managers brought the CCC allocation back down to roughly 10% of assets, but this was still nearly double its median peer's allotment and not enough to prevent the stake from stinging as lower credit quality loans sold off during 2022. 
The strategy's heavy credit-rating bets have hurt more than they’ve helped. From May 2013 (the fund’s first full month) through May 2023, the fund registered a 2.6% annualized return, placing it in the worst quintile among distinct rivals.
Correction (Aug. 15, 2023): A previous version of this report didn't list Bonnie Brookshaw as a named manager of the fund.

Analyst Rating

Lackluster.

Senior Analyst

R.J. D'Ancona

The strategy lacks a durable edge compared with rivals and has often relied on large reallocations across credit quality tiers. It earns an Average Process rating. 
The strategy's approach to individual security selection is fairly standard. The management team selects securities from a central database that is shared across the liquid credit strategies group. In order to make the cut for the database, a security has to pass muster in a multistep process. First, analysts conduct fundamental research based on standard industry metrics that evaluate an issuer's ability to maintain sufficient cash flows and profitability to service their obligations in a range of economic environments. If a potential investment makes it through this initial step, the group then requires a unanimous vote by the investment committee to warrant database inclusion.  
Within this framework, the managers don't shy away from sizable allocation shifts across the credit ratings spectrum as they seek to best rivals, but such tactical reallocations are difficult to get consistently right over time. To be sure, the strategy's focus on larger, more liquid issuers has generally helped it satisfy redemptions when investors have fled the bank-loan sector for safer assets.

Average

Process

Seasoned Managers Daniel McMullen and Gordon McKemie are supported by a substantial team, warranting an Above Average People rating.
McMullen and McKemie boast 29 years and 17 years of experience, respectively. McMullen joined Blackstone in 2002 and has comanaged this strategy since its 2013 inception. He also serves as head of the firm's liquid credit strategies North American portfolio management. McKemie has managed this strategy alongside McMullen since May 2015. He joined Blackstone in 2012 and is a member of its liquid credit strategies syndicated credit investment committee. The duo welcomed 24-year industry veteran Bonnie Brookshaw to the strategy's management ranks in October 2021. Brookshaw previously managed and implemented the day-to-day investment strategy for the firm's U.S. collateralized loan obligations. 
The trio is backed by a 27-member U.S.-based credit research team. The research team supports multiple strategies within Blackstone's broader liquid credit strategies group, a subset of Blackstone’s vast industry footprint.  
All told, the bunch is one of the largest research teams in the bank-loan peer group and is well-versed in running leveraged financed strategies, with the firm's size granting them an advantage compared with smaller peers.

Above Average

People

State Street Global Advisors is under new leadership but continues to move along the positive trajectory established by former leaders. SSGA maintains its Above Average Parent Pillar rating.
Cyrus Taraporevala, who oversaw much of SSGA’s recent transformation, retired from the CEO position in December 2022 and passed the baton to his successor, Yie-Hsin Hung. She inherited a business that’s become more disciplined with its fund lineup. Fees have come down, while product development remains focused on fixed-income and sustainability funds, and many of SSGA’s launches have echoed that intention.
The seeds that SSGA planted over the past several years have been bearing fruit. It built out a low-cost series of portfolio building-block ETFs in the U.S. bearing the “SPDR Portfolio” branding. SSGA launched these later than its industry rivals, so they aren’t as large. But they’re competitive, with solid management and low fees, which helped them consistently take in new money over the past several years.
SSGA continued to overhaul its ETF business in Europe with most of its recent fixed-income and sustainability fund launches. Many of these funds track indexes and charge relatively low fees. With operations in the U.S. and Europe standing on a firm foundation, SSGA will put more focus on its Asia-Pacific business—the smallest regional segment of its business.

Parent

 SPDR Blackstone Senior Loan ETF

SRLN provides actively managed exposure to noninvestment-grade, floating-rate senior secured debt of US and non-US corporations that resets in 3 months or less.

SPDR Blackstone Senior Loan ETF seeks to provide current income while preserving capital by investing in senior loans. SRLN is overweight in single-B leveraged loans and has a low concentration in CCC-rated loans. The Fund has poor analytics compared to its peers and has historically underperformed the leveraged loan index.

SRLN: Better Alternatives Exist In The Leveraged Loan Space

Invesco Senior Loan ETF

Eaton Vance Floating-Rate ETF

First Trust Senior Loan Fund

Morgan Stanley Investment Management's active senior loan ETF is a compelling offering in the current environment. Investors have increasingly looked to senior loan ETFs in recent history instead of high yield bonds.

MSIM's Active Senior Loan ETF Beats Competitors on Cost

When the Exchange conference starts on Monday, advisors will have a new active floating rate bond ETF to learn about. It's one that's backed by a firm with a rich heritage in the investment style.

Eaton Vance Loans Expertise to the ETF Market

Floating rate investments like SRLN may see lower forward returns due to the Fed's plan to lower interest rates in 2024. SRLN has underperformed passive leveraged loan ETFs and has not lived up to its mandate. Investors interested in floating-rate leveraged loans may want to consider CLO ETFs like the JBBB ETF, which has outperformed SRLN and offers similar distribution yields with higher credit quality.

SRLN: Underperforming Leveraged Loan Fund

SPDR Blackstone Senior Loan ETF provides exposure to senior loans and aims to generate current income while preserving capital. Senior loans are high-yield debt obligations backed by the borrower's assets, offering protection against inflation but carrying higher credit risk. The SRLN ETF's portfolio is diversified across various sectors, with no AAA rated holdings, and has shown competitive performance compared to similar ETFs.

SRLN: An Interesting Income Play Few Talk About

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Amid the prospect of higher interest rates for a longer-than-expected period, investors are flocking to bank loan ETFs.

5 Bank Loan ETFs to Capitalize on Higher Rates

Panagram Bbb-B Clo Etf

Janus Henderson AAA CLO ETF

Janus Detroit Street Trust-Janus Henderson B-BBB CLO ETF

Federal Reserve hikes have led to strong dividend growth in most variable rate securities and funds. Two of these are senior loans and CLO debt tranches. A look at the similarities, and differences, between these two asset classes follows.

Senior Loans Or CLO Debt, Which Is Best For Income Investors And Retirees?

Senior loan ETFs can offer protection against rising interest rates.

An Introduction to Senior Loan ETFs

Investing in a bank loan ETF can offer a compelling yield while helping maintain defensive portfolio positioning. In the current environment, investors who want to generate as much yield as possible might look to bank loans instead of high yield bonds.

Invesco's Bank Loan ETF Offers High Yield, Outpaces Active Peers

Senior loans currently yield more than most relevant fixed-income sub-asset classes. SRLN is an actively-managed senior loan ETF, offering investors a growing 7.4% yield. An overview of the fund follows.

SRLN: Growing 7.6% Yield, Low Interest Rate Risk, Strong Recent Performance

SPDR Bloomberg Investment Grade Floating Rate ETF

WisdomTree Bloomberg Floating Rate Treasury Fund

Floating rate securities offer investors strong, above-average yields with little in interest rate risk. There are several ETFs focusing on these securities. Three stand out, and offer strong investment opportunities for income investors.

3 Floating Rate ETFs For Income Investors And Retirees

Leveraged loan defaults are heading for the third-worst year in history as Federal Reserve interest rate hikes take a toll, according to Goldman Sachs.

Leveraged loan defaults hit $25 billion, head for third worst year in history, Goldman

Simplify Enhanced Income ETF

Invesco AAA CLO Floating Rate Note ETF

SPDR Bloomberg High Yield Bond ETF

Invesco Variable Rate Investment Grade ETF

BondBloxx BB-Rated USD High Yield Corporate Bond ETF

BondBloxx CCC-Rated USD High Yield Corporate Bond ETF

Bull vs. Bear is a weekly feature where the VettaFi writers' room takes opposite sides for a debate on controversial stocks, strategies, or market ideas — with plenty of discussion of ETF ideas to play either angle. For this edition of Bull vs.

Bull vs. Bear: Are High Yield ETFs Worth the Higher Risk?

VanEck J.P Morgan EM Local Currency Bond ETF

iShares iBoxx High Yield Corporate Bond ETF

It's a new era out there for fixed income investors. After years of suffering through a prolonged low rate environment, interest rates have risen to more historically typical levels.

3 High-Yield Bond ETFs to Buy for Income in a Low-Rate Environment

Avantis U.S. Small Cap Value ETF

Global X Russell 2000 Covered Call ETF

Schwab Strategic Trust-Schwab International Dividend Equity ETF

Vanguard Small Cap Value ETF

Vanguard Total International Stock ETF

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Most Undervalued Asset Classes, Equity Industries, Segments, And Regions.

Most Undervalued Asset Classes, Equity Industries, Segments, And Regions

iShares Core U.S. Aggregate Bond ETF

VanEck Fallen Angel High Yield Bond ETF

Invesco BulletShares 2025 Corporate Bond ETF

iShares Fallen Angels USD Bond ETF

iShares iBonds Dec 2025 Term Corporate ETF

Pimco Senior Loan Active Exchange-Traded Fund

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This week, the VettaFi Voices gathered around the water cooler to talk about fixed income.

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iShares Trust iShares 1-5 Year Investment Grade Corporate Bond ETF

PIMCO Enhanced Low Duration Active ETF

SPDR DoubleLine Total Return Tactical ETF

While 2022 is not finished, two things are quite likely to be a fact in early 2023.

Don't Get AGG-ravated, Expand Your Fixed Income Toolset

Senior secured loans see higher yields and dividends when interest rates rise. SRLN is the highest-yielding senior loan ETF in the market, with a growing 5.3% yield.

SRLN: Largest, Highest-Yielding Senior Loan ETF, Growing 5.3% Yield, Low Interest Rate Risk

SPDR Gold Trust

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Falling stocks, bonds crimp fund purchases; fee revenue dropped 8%.

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iShares Core MSCI Emerging Markets ETF

iShares Core S&P Mid-Cap ETF

iShares Core S&P 500 ETF

iSh SP US PrfSt Shs

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As the Federal Reserve raised interest rates to combat inflation, NorthCoast Asset Management found opportunity in bond ETFs during the third quarter.

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Vanguard Total Bond Market ETF

iShares Core S&P Small Cap ETF

iShares Russell 1000 ETF

iShares iBoxx $ Investment Grade Corporate Bond ETF

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Vanguard Short-Term Treasury ETF

July was another strong month for the Tradeweb European ETF marketplace, with trading activity amounting to EUR 58.7 billion. Total consolidated U.S. ETF notional value traded in July 2022 reached USD 44.1 billion.

Tradeweb Exchange-Traded Funds Update - July 2022

Xtrackers USD High Yield Corporate Bond ETF

As big money managers quietly step back into the high-yield debt market following a steep sell-off this year, investors can also begin to take a second look at attractively priced speculative-grade bond exchange traded funds. For instance, BlackRock Inc. and KKR & Co. Inc.

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SPDR R Blackstone High Income ETF

SPDR Portfolio Intermediate Term Corporate Bond ETF

SPDR SSgA Ultra Short Term Bond ETF

As the post-pandemic rebound slows, investors are navigating rising inflationary pressure, tightening monetary policies, ongoing geopolitical risks, and the lingering threat of COVID-19 variants. A solid investment plan that takes all of these factors into consideration is essential for any portfolio hoping to adapt to the new normal.

Macro Polo: Finding the Right Investment Strategy For the Moment

Demand for actively managed senior loan ETFs has skyrocketed in the past year, helping State Street Global Advisors and First Trust fill their coffers. Indeed, the two firms have pulled nearly $9 billion combined into these less interest rate-sensitive, yet higher-yielding fixed income securities.

BlackRock Sets Stage for Own Active Senior Loan ETF

ARK Innovation ETF

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Dimensional US Targeted Value ETF

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PIMCO Enhanced Short Maturity Active ETF

After being ignored for years, actively managed ETFs are experiencing a renewed interest from investors. A report from Morningstar shows that after active funds of all stripes experienced net outflows from 2015 to 2020, active ETFs saw $87 billion in inflows in 2021, with the total amount of money in active ETFs growing by 44% [.

News for SPDR Blackstone Senior Loan ETF ETF (SRLN)