Pyxis Enters ETF Arena With Senior Junk Fund

Pyxis Enters ETF Arena With Senior Junk FundPyxis Capital, the fund investment advisory spun-off from Highland Capital Management earlier this year, made its initial foray into the ETF arena with its November 7 launch of the Pyxis Funds I (NYSEARCA:SNLN). The underlying Markit iBoxx USD Liquid Leveraged Loan Index is comprised of 100 of the most liquid, tradable leveraged loans, as identified by Markit’s Loans Liquidity service.

According to the Pyxis Funds I (NYSEARCA:SNLN) overview, the fund has an expense ratio of 0.55%.  I could not find any information regarding yield, days to reset, volatility, performance, or other characteristics for either the fund or the underlying index.  The fund’s holdings are identified by issuer name and allocation only (no yield or maturity information).

Analysis/Opinion: For the uninitiated, “Senior Loans” are securities rated below investment grade.  They are sometimes called syndicated or leveraged loans and have a floating (variable) interest rate.  However, the casual visitor to the fund and index websites will not be made aware of these facts when reading the objectives, descriptions, philosophy, or investor suitability.  Only when diving into the small print will potential investors learn that:

Leveraged Loans are loans to companies that typically already have a high amount of debt and are often characterized by lower credit ratings or higher interest rates.

The Fund may invest all or substantially all of its assets in Senior Loans or other securities that are rated below investment grade.

Securities rated below investment grade are commonly referred to as “high yield securities” or “junk securities.”

Another item investors should be aware of is that unlike most ETFs, Pyxis Funds I (NYSEARCA:SNLN) will perform share creations and redemptions principally for cash, rather than through in-kind exchanges.  As a result, an investment in Pyxis Funds I (NYSEARCA:SNLN) may be less tax efficient and have higher tracking error than investments in conventional ETFs.

The new ETF from Pyxis faces competition from PowerShares Exchange-Traded Fund Trust II (NYSEARCA:BKLN), which was the first Senior Loan ETF.  Launched in March 2011, BKLN is currently yielding about 4.8% with a total expense ratio of 0.76%.  The fund experienced an 8% decline during a six-month stretch in 2011, a time frame when iShares Barclays Aggregate Bond Fund (NYSEARCA:AGG) gained 6.8%.

New entrants into the ETF industry have been struggling to succeed.  Having 17 funds, Pyxis is no stranger to the mutual fund marketplace.  However, mutual fund success does not automatically translate to ETF success, with Old Mutual GlobalShares being just one example.

This article was originally written by Ron Rowland, and posted on InvestWithAnEdge.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 9 Most Dangerous Countries for Tourists to Visit

Reign of Terror: The 10 Most Ruthless Politicians in History

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!