Filograph Invesco Senior Loan ETF (NYSEARCA:BKLN) is a high-yield fund designed to generate income while maintaining share price stability. It can serve as a short-term cash investment, but its long-term performance is uncertain. Over the last decade, the fund has delivered 49% in total returns, while its net asset value (NAV) and share price have declined by approximately 16% during the same period (YCharts).
Senior loans are a specialized type of corporate bond that typically hold the highest priority for repayment, making them less risky than other forms of debt. They are often backed by tangible assets, and their interest rates tend to be lower and have floating rates. This stability typically results in less price fluctuation compared to traditional fixed-rate bonds, as demonstrated in the chart below. However, this also means that they are less likely to see share price appreciation if traditional bonds make a comeback and enter a new bull market. Due to their complexity, senior loans are typically held by banks, funds, and institutions, and are less accessible to retail investors. As a result, investors looking for exposure to senior debt often turn to funds and ETFs like BKLN.
At present, BKLN has a high expense ratio of 0.65% and a significant position in government bond instruments. Its holdings include smaller companies such as Peraton, McAfee, and Hub International, with many bond holdings belonging to private companies. The fund’s dividend history has fluctuated, but it currently offers an annualized distribution yield of 8%. While BKLN may be suitable for short-term cash allocation, investors seeking long-term growth opportunities may want to explore other options.