Daily ETF Watch: Floater Fund Cheaper

Investors of SRLN get 22 percent of expense ratio relief.

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.