Become A Wiser, More Profitable Investor

An Introduction to Senior Loan ETFs - Yahoo Finance

The prospect of higher interest rates for a longer-than-expected period has made investors choosy about their investment plans. In such a scenario, investing in senior loans could prove beneficial.Senior loans are floating rate instruments and thus pay a spread over the benchmark rate like LIBOR, helping to eliminate interest rate risk. This is because when interest rate rises, coupons on senior loans increase while the value of the bonds decline, keeping investments stable. Since these loans are issued by companies with below investment-grade credit ratings, they usually pay yields in order to compensate for this risk.Given this, senior loans ETFs provide a convenient way to get broad exposure to a particular market segment.

Yahoo     Sep 15, 2023