Invesco Canada has expanded its lineup of ETFs with the launch of the PowerShares Senior Loan (CAD Hedged) Index ETF (BKL).
According to Invesco, the ETF has been designed to meet growing investor demand for increased yield and protection against the threat of rising interest rates.
As Canada’s first senior loan ETF, the PowerShares Senior Loan (CAD Hedged) Index ETF (BKL) provides access to an asset class that has historically delivered higher yield than other fixed-income securities of equal or higher credit quality and provided investors with an added measure of security against borrower default.
In addition, the low duration of senior loans may help to reduce a portfolio’s overall interest-rate sensitivity.
“With this new ETF, Invesco Canada is helping to open up an asset class that has traditionally been traded exclusively by institutional investors,” said Michael Cooke, Head of Distribution for PowerShares Canada. “Senior Loans are a great way for investors to diversify their fixed-income portfolios by offering low correlation to other fixed-income segments.”
The ETF seeks to replicate (before fees and expenses) the performance of the S&P/LSTA (Loan Syndications and Trading Association) US Leveraged Loan 100 Index (CAD Hedged). The index gives investors exposure to the largest 100 loan facilities drawn from a larger benchmark – the S&P/LSTA Leveraged Loan Index.
As of 31 January 2012, the S&P/LSTA Leveraged Loan Index covered more than 900 facilities and had a market value of more than US$484 billion; the S&P/LSTA US Leveraged Loan 100 had a total market value of US$188.1 billion. In terms of industry exposure, as at year-end 2011 the index’s top three industry weightings were Media, Services/Retail and Healthcare.