Financial Serenity 1.91K Followers

Summary

With the Fed hiking instead of cutting and persistent inflation, I think floating rate ETFs like State Street SPDR Blackstone Senior Loan ETF are competitive against other fixed income solutions.

SRLN offers a 7.19% SEC yield, near-zero duration, and 31 days to rate reset, so any new Fed hike reaches distributions in about a month.

Loan default rates are holding up, and without a recession I see no reason for borrowers to stop paying.

I estimate a return above 5%, so I rate SRLN a buy while keeping an unforeseen negative shock in mind.

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For two years the market bet on rate cuts. In September the Federal Reserve did the opposite: it hiked.…