BlackRock has rolled out a new ETF aimed at expanding investor access to the fast-growing leveraged loan market, a segment of credit that has historically been difficult to access through index-based products.
The asset manager announced the launch of the iShares Broad USD Floating Rate Loan ETF (BATS:USLN), which seeks to track the Morningstar LSTA US Leveraged Loan Broad Select Index. The ETF primarily invests in U.S. dollar-denominated senior secured leveraged loans.
The launch comes as the U.S. leveraged loan market has expanded to roughly $1.4 trillion, bringing it close in size to the high-yield bond market and attracting growing institutional and ETF investor interest.
Expanding Access To Floating-Rate Credit
Leveraged loans typically carry floating interest rates and sit higher in the capital structure than traditional high-yield bonds, making them appealing to investors seeking income with reduced sensitivity to interest-rate fluctuations.
The fund carries a 0.40% net expense ratio.
Adding To BlackRock's Credit ETF Lineup
The new ETF expands BlackRock's broad credit index suite, which already includes products such as the iShares Broad USD High Yield Corporate Bond ETF (BATS:USHY) and the iShares Broad USD Investment Grade Corporate Bond ETF (NASDAQ: USIG).
It also complements the firm's existing floating-rate strategies, including the actively managed iShares Floating Rate Loan Active ETF (BATS:BRLN) and the BlackRock Floating Rate Income Fund (NYSE:FRA).
BlackRock is already one of the largest investors in the leveraged loan market, overseeing more than $40 billion in loan assets globally. The firm said the new ETF aims to provide a more scalable, transparent entry point into the asset class through an index-based structure.
Through its iShares platform, BlackRock manages more than $5.7 trillion in ETF assets globally, including over $1.2 trillion in bond ETFs, reflecting the rapid growth of fixed income ETFs since the first bond ETF debuted in 2002.
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