Pyxis Funds, the Texas-based registered investment adviser with 21 funds under management, will introduce the Pyxis/iBoxx Senior Loan ETF on Tuesday October 30. The new ETF will trade on the New York Stock Exchange under the ticker SNLN.
Pyxis filed plans for the ETF in July.
The Fund may invest all or substantially all of its assets in Senior Loans to Borrowers having outstanding debt securities rated below investment grade by a NRSRO and unrated debt securities of comparable quality. Debt securities rated below investment grade (or unrated debt securities of comparable quality) commonly are referred to as junk securities.
The Fund seeks to invest in those Senior Loans with respect to which the Borrower, in the judgment of the Adviser, demonstrates one or more of the following characteristics: sufficient cash flow to service debt; adequate liquidity; successful operating history; strong competitive position; experienced management; and, with respect to collateralized Senior Loans, collateral coverage that equals or exceeds the outstanding principal amount of the Senior Loan. The Fund may, however, invest without limitation in loans that do not exhibit all or any of these characteristics, according to the ETF's filing with the Securities and Exchange Commission.
While the concept of senior loans in ETFs may seem too narrowly focused to attract substantial investor interest, the opposite is actually true and that means SNLN is potentially walking into a lion's den of competition.
Since March 2011, the PowerShares Senior Loan Portfolio (BKLN) has had the senior loan ETF market to itself and first mover advantage is obvious with this ETF. BKLN has almost doubled its assets under management total sine early July.
BKLN, which charges 0.76 percent per year, has a 30-day SEC yield of 4.9 percent and pays a monthly dividend.
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