Blackstone, State Street Offer High-Yield Loan ETF

Apr 5 2013 | 11:44am ET

The Blackstone Group and State Street Corp. yesterday launched a junk-bond exchange-traded fund as U.S. leveraged loan issuance and investor demand spike.

The SPDR Blackstone/GSO Senior Loan ETF is managed by Blackstone's credit hedge fund unit, GSO Capital Partners, and State Street Global Advisors. The fund debuted yesterday on the New York Stock Exchange's Arca market, trading under the ticker symbol "SRLN."

The new ETF will compete with Invesco PowerShares' two-year old Senior Loan Fund and the iBoxx Senior Loan ETF, managed by Highland Capital Management, although the Blackstone-State Street fund is the first actively-managed senior loan fund.

"Given the high turnover of senior loans and the critical importance of credit selection, we believe an active strategy provides a key advantage to investors who want access to this corner of the market," James Ross, head of the SPDR ETFs, said. The new fund charges a 0.9% expense ratio, higher than the 0.55% charged by iBoxx and 0.65% charged by PowerShares.

"SSgA is a pioneer in the ETF market and we are pleased to join them in bringing the first actively-managed senior loan ETF to investors," Blackstone's Lee Shaiman said.

PowerShares' fund has $2.9 billion in assets and the iBoxx fund, which debut in November, $60 million.

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