SRLN: 7.7% Yield Remains Attractive, But Rate Cut Expectations Reduce Allocation Case

Prakhar Agarwal, CFA51 FollowersFollow5ShareSavePlay(10min)CommentsSummaryThe SPDR Blackrock Senior Loan ETF (SRLN) offers an ~8% dividend yield at present with active management targeting opportunities largely in senior loans.SRLN's floating rate, short-tenure loans reduce interest rate sensitivity, with exposure on issuer credit quality and fundamentals largely.SRLN is rated a hold because of current elevated interest rates, reducing the attractiveness of 'low duration' while also capping the capital appreciation potential if rates go down.The credit spread at present is also close to the lower end of the range, reducing the appeal of the fund- in case spreads widen. Dilok Klaisataporn/iStock via Getty Images The SPDR Blackstone Senior Loan ETF (SRLN) is an active fund focusing on having underlying exposure in senior secured loans. At present SRLN offers a dividend yield of roughly 7.7%. The fund benchmarks itself against the Morningstar LSTAThis article was written byPrakhar Agarwal, CFA51 FollowersFollowI have been managing investments for over eight years in capital markets. By qualification I am a CFA Charter holder. I primarily look for discrepancies between the price and value of a security. With a focus on first-principal mindset, I try breaking down ideas into their core- most tangible parts, affecting the theses while deliberately avoiding the non-significant matter into crowding the analysis. If you like my ideas or frameworks, reach out via email/message for more granular and concentrated- portfolio level specific investment researches and ideas. I am at prakhar@shrihittruealphacapital.com.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Readers are advised to fact-check thoroughly before making any investment related decisions; this reflects the personal views of the author and should not be pursued as formal financial or investment advice in any manner. While every effort has been made to ensure accuracy, errors may exist in the data and financial projections presented. The author is not responsible for any financial gains or losses incurred from investments made based on this content. For any additional information regarding the company or any clarification, feel free to comment. Happy to discuss anything further with regard to the presented investment thesis.Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.