Pyxis Challenges BKLN With Senior Loan ETF

By
ETF.com Staff
November 07, 2012
Share:


After a Hurricane Sandy-related launch delay, Pyxis rolls out its first ETF, a senior loan fund that takes on PowerShares.

Related ETFs

Ticker Fund name
BKLNPowerShares Senior Loan Portfolio
Related ETF Lists
Bond ETFs, Fixed Income ETFs, US High Yield ETFs

 

Pyxis Capital, the mutual fund arm of Dallas-based money management firm Highland Capital, today is launching its first ETF, a fund that would serve up access to senior loans in a strategy that would go head-to-head against a popular product from PowerShares.

The Pyxis/iBoxx Senior Loan ETF (NYSEArca: SNLN) was originally scheduled to launch Tuesday, Oct. 30, but due to the U.S. stock market storm-related shutdown Monday and Tuesday of last week, the firm launch rescheduled the rollout for Nov. 7.

The fund will track the Markit iBoxx USD Liquid Leveraged Loan Index and invest primarily in below-investment-grade senior loans to domestic and foreign corporations and partnerships, the company said in a recent regulatory filing. The ETF has an annual expense ratio of 0.55 percent, according to that paperwork.

It appears that SNLN is the same fund Pyxis originally registered under the name Pyxis/iBoxx Liquid Loan ETF back in July. That ETF that was to be linked to the same index, but listed on the Nasdaq under the ticker LQLN.

Senior loans generally have risk profiles that are similar to below-investment-grade securities, but what sets them apart is that they have a right to payment before most other debts a borrower has. That means senior loans have higher recovery rates than other below-investment-grade debt should a company default on debts.

They are also less sensitive to interest rate risk than other high-yield debt because their yields are adjusted for changes in short-term rates. That lowers their correlations to other fixed-income instruments. In the end, a senior loan portfolio allows investors to tap into relatively stable pockets of the capital markets.

SNLN would face the $1.3 billion PowerShares Senior Loan Portfolio (NYSEArca: BKLN), the first ETF to serve up direct access to senior loans. That fund was launched in March 2011, and costs 0.76 percent, a price that includes 11 basis points in acquired fund fees.

As noted, SNLN marks Pyxis’ initial foray into the ETF market. The firm, which spun off from Highland at the start of the year, offers some 20 open-end mutual funds and traditional closed-end funds, but no ETFs as of now.

 

ETF.COM CHANNELS

Interested in China? Use our China ETFs Channel, library, and ETF screener.

Interested in oil? Use our oil ETFs channel, library and ETF screener!

ETF DAILY DATA

The small-cap ETF was in favor on Monday, May 23.

The top four ETF issuers all saw net outflows from their products on Monday, May 23.

ETF.COM ANALYST BLOGS

By Sumit Roy

Here's why the once-strong correlation between stocks and oil has weakened.

By Drew Voros

Leveraged and inverse funds are being traded like they were designed to be.

By Matt Hougan

This year so far, 772 ETFs have attracted assets, but one stands alone as defining where the industry is heading.

By Drew Voros

Some ETF names get right to the point; others take a lot more words to describe what they’re all about.

ETF INDUSTRY PERSPECTIVE

By Jack Fonss

An ideal ETF should be perfectly linked to its underlying.

By Adam Patti

The asset class came under criticism in 2015.

By Sprott Asset Management

New fund’s underlying index targets equities sentiment on social media.