BKLN offers higher yield with less interest rate risk but significantly higher credit risk. The index tracks the 100 largest bank loan facilities floating-rate, high-yield senior debt issued by banks to companies. Bank loans offer relative safety from interest rate risk because the coupons are reset periodically, but they do take significant credit risk. In fact, the bulk of BKLN`s portfolio is below investment grade and debt from firms in bankruptcy is not ruled out either. While the floating rate feature greatly reduces sensitivity to changes in interest rates, it doesn`t eliminate it. A spike in interest rates makes it harder for issuers to service their debt, potentially raising default risk. The index is rebalanced and reconstituted semi-annually. Prior to august 29, 2022 the fund tracked the S&P/LSTA U.S. Leveraged Loan 100 Index.
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