- Bank loan funds (also known as senior loans or leveraged loans) have seen $5.6B of net inflows this year, with a nice chunk of that coming in the weeks since the election, writes Chris Dieterich at the WSJ.
- It's no secret why: First, investors view bank loans as lower risk than junk bonds as they're ahead in the corporate structure in the event of a default. Maybe more importantly given the current environment, these loans are floating rate, making them popular in times of rising interest rates.
- One measure of how popular they've become - narrowing discounts to NAV in closed-end funds. The Apollo Senior Floating Rate CEF (NYSE:AFT) could be had for a 15.1% discount to NAV in February, but just 5.1% today. Similar action is seen in others like the BlackRock Floating Rate Income Strategies Fund (NYSE:FRA) and the Nuveen Floating Rate Income Opportunity Fund (NYSE:JRO).
- Related ETFs and CEFs: OXLC, BKLN, PPR, EFR, VVR, ECC, BGB, PHD, SRLN, NSL, BGX, FCT, BSL, AFT, EVF, SNLN, TSLF, FTSL, TLI, BHL
Original article