Daily ETF Watch: Floater Fund Cheaper

Investors of SRLN get 22 percent of expense ratio relief.

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Reviewed by: Hung Tran
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Edited by: Hung Tran

Investors of SRLN get 22 percent of expense ratio relief.

State Street Global Advisors cut the management fee on the SPDR Blackstone / GSO Senior Loan ETF (SRLN) by more than a fifth to 70 basis points—$70 for each $10,000 invested—from 90 basis points, according to a regulatory filing made by the Boston-based fund sponsor.

The move comes at a time when investors, who are bracing for the Federal Reserve to begin pushing interest rates higher, seek out funds that can take interest-rate risks off the table.

What’s appealing about floating-rate securities, which typically have two- to five-year maturities, is that they have variable coupon rates that reset regularly. The rate is set as a spread plus a reference benchmark rate such as Treasury rates or Libor, and the reset-rate feature protects the notes from interest-rate risk.

The $613.2 SRLN, an actively managed fund, launched exactly a year ago. It provides exposure to noninvestment-grade, floating-rate senior secured debt of U.S. and non-U.S. corporations that resets in three months or less.

SRLN’s fee reduction still makes it more expensive than its much larger competitor, the $7.43 billion PowerShares Senior Loan Portfolio (BKLN), which has a net expense ratio of 0.66 percent, or $66 for every $10,000 invested.

However, both funds’ fees are much higher than the $3.7 billion iShares Floating Rate Fund ETF (FLOT | A-99), which has an expense ratio of 0.20 percent, or $20 for every $10,000 invested.

Filing

The Nasdaq OMX Group Inc. and Chaikin Analytics today is launching three Nasdaq Chaikin Power Indexes, including:

  • Nasdaq Chaikin Power US Large Cap Index (NQULCHK)
  • Nasdaq Chaikin Power US Small Cap Index (NQUSCHK)
  • Nasdaq Chaikin Power US Dividend Achievers Index (NQDACHK)

These new indexes are based on the Chaikin Power Gauge, a multifactor quantitative model that combines fundamental, technical and sentiment factors into a rating that indicates a security’s statistical probability to over- or underperform the market in the intermediate term.

The indexes were created by Marc Chaikin, a former stock analyst and founder of Chaikin Analytics.

 

Hung Tran is a former staff writer for etf.com.