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NASDAQ Trades Its First Ever Senior Loan ETF

Powershares, for example, established a credit line for short term needs if ever BKLN experienced a large redemption that would require paying out investors.

"BKLN showed how successful it could be and now everyone else is coming in," Strauts said. "As for First Trust's new product and the bank loan category overall, as long as there is not an impending recession. You'll get 4 to 5% returns."

Rising rates hurt the prices of fixed-rate debt, such as lower-yielding investment-grade corporate bonds. But loans have floating interest rates so investors are protected and make more if rates go up.

"There's almost no upside in fixed income today, and there's significant downside so you have to find other ways to generate income in alternative strategies, like high yield long short and floating rate senior loans," concluded Housey.

--Written by Juliette Fairley for MainStreet

Also see: Top ETFs for Your Retirement Savings
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BKLN $22.69 0.13%
SNLN $18.24 0.22%
SRLN $46.86 -0.04%
FTSL $47.41 0.02%
TSLA $231.11 0.64%


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