> ## Content Index > Fetch the complete content index at: https://www.leadlagreport.com/llms.txt > Use this file to discover other available public pages before exploring further. # This 6.8% Loan Fund's Check Is Up 15% Since June. Its Share Price Is Down 18% Since 2011 - URL: https://www.leadlagreport.com/this-6-8-loan-funds-check-is-up-15-since-june-its-share-price-is-down-18-since-2011/ - Published: 2026-11-13T21:00:00.000Z - Updated: 2026-11-13T21:00:02.000Z - Description: BKLN's monthly payout rose from $0.101 to $0.116 in four months as short rates climbed. The price is down 18% since 2011. Both facts come from the same loans. - Author: Michael A. Gayed, CFA - Tags: High Yield Spotlight ## *For New York area advisors: a private dinner with Michael, Thursday, November 19* ![Private advisor dinner in Manhattan, Thursday, November 19, hosted by Michael A. Gayed, CFA](https://storage.ghost.io/c/b8/9e/b89e006c-adc9-4384-b804-e802e23b544e/content/images/2026/11/ct_dinner_header_1200x628_notime.png) New York area advisors: I'm hosting a small private dinner in Manhattan on Thursday evening, November 19, with the head of ETF sales at a large asset manager. No presentation, just a table of advisors talking markets. A few seats are open. Reply "NYC" to this email and I'll send you the details. Reading this on the web? Email michaelgayed@leadlagmedia.com with NYC in the subject line. --- # This 6.8% Loan Fund's Check Is Up 15% Since June. Its Share Price Is Down 18% Since 2011 ### *BKLN's loans reset about every 40 days, so the Fed's September hike is already in the payout. The same rates are squeezing the borrowers, and 8% of the loan market now trades below 80 cents on the dollar.* **MICHAEL A. GAYED, CFA** ## Key Highlights - BKLN paid $0.11635 a share in October, which annualizes to $1.396, or 6.80% on the $20.53 close of Nov. 12\. Invesco puts the distribution rate at 6.79% and the 30-day SEC yield at 7.51% as of Nov. 10.1, 2 - The loans pay a floating rate, with a weighted average coupon of 6.80% and 40 days to the next reset. The Fed raised its target range to 3.75% to 4.00% on Sept. 16, and the overnight SOFR rate went from 3.66% at the end of July to 3.90% on Nov. 12.2, 4, 5 - The share price is down 18.3% since the first close in March 2011, while the total return with distributions reinvested is 79.8%, by my calculation. All of the return came from the income.3 - Eight of the ten largest positions are rated B+ or lower by S&P, and 8.01% of performing loans in the broad loan index traded below 80 cents on the dollar in October, the first reading above 8% since July 2020.2, 7 - The fund holds $5.79 billion across 169 positions, with a 0.65% net expense ratio and a median bid-ask spread of 0.05%.2 *Every week, we'll profile a high yield investment fund that typically offers an annualized distribution of 6-10% or more. With the S&P 500 yielding less than 2%, many investors find it difficult to achieve the portfolio income necessary to meet their needs and goals. This report is designed to help address those concerns.* If you own bonds for income, the weeks since the end of August have been uncomfortable. The Federal Reserve raised its target range to 3.75% to 4.00% on Sept. 16, its first hike since July 2023.4 The 10-year Treasury yield has been as high as 5.31% since then.12 The extra yield investors demand to hold high yield bonds went from 2.60 percentage points on Aug. 28 to 3.48 on Nov. 5, the widest in a year.6 Over that stretch, the HYG high yield bond ETF has lost 2.1% with its coupons included.11 There is one corner of the credit market where a Fed hike is a pay raise for the lender. Senior bank loans pay a floating rate, a fixed margin on top of a short-term benchmark, so when the benchmark rises the coupon follows within weeks. The catch is that the borrower on the other side pays more interest every time the lender collects more. The **Invesco Senior Loan ETF (BKLN)** has been a way to own that trade since 2011\. Its monthly distribution has risen four months in a row, from $0.10135 in June to $0.11635 in October, a 14.8% increase.2 Since the end of August it has returned 0.9% while high yield bonds fell.11 The 6.8% yield is real, and so is the fact that the share price has gone down, slowly, for fifteen years. ## Fund Background Invesco describes BKLN as a fund "based on the Morningstar LSTA US Leveraged Loan 100 Index" that "will normally invest at least 80% of its total assets in the component securities that comprise the Index."2 In plain terms, it owns the 100 or so largest loans made to below-investment-grade companies, weighted by size. It samples the index instead of buying every loan, and the fund and index are rebalanced only twice a year, in June and December.2 BKLN began trading on March 3, 2011\. It held $5.79 billion across 169 positions on Nov. 10, at a net asset value of $20.55 a share and a closing price of $20.53\. The net expense ratio is 0.65%, and it trades heavily for a credit fund, with a 30-day average of 15.7 million shares a day and a median bid-ask spread of 0.05%.2 The weighted average coupon was 6.80% and the yield to maturity 8.24% on Nov. 6, with a weighted average maturity of 4.82 years and 40.34 days to reset.2 A bond with 4.8 years to maturity loses value when rates rise. A loan whose coupon resets in 40 days mostly does not, because the coupon catches up before the price has to adjust. ## Portfolio Composition Invesco's fund page does not publish a credit rating breakdown, so I read the top of the book. The ten largest positions on Nov. 10 added up to 14.99% of assets, from Hopper Merger Sub at 1.77% to Peraton at 1.38%.2 It is not diversified by credit quality. Eight of those ten loans carry an S&P rating of B+ or lower. Three are rated B-, one notch above the CCC category, and Peraton is already rated CCC+ with a loan that matures in February 2028\. Only Skydance, at BBB-, and OAK-Eagle Acquireco, at BB, rate higher.2 The coupons range from 6.30% to 7.91%, or roughly 2.4 to 4 points over the 3.90% overnight benchmark for lending to single-B companies.2, 5 UKG, Dayforce and AthenaHealth are software companies, and several of the ten are private-equity-owned businesses that were bought with debt. When you buy BKLN you are the lender in a leveraged buyout, with a first claim on the assets and a coupon that moves with the Fed. That first claim is worth less than it used to be, because much of the restructuring in this market now happens out of court, in deals that reorder lenders without a bankruptcy filing. ## Historical Performance BKLN's first close in March 2011 was $25.13\. It closed at $20.53 on Nov. 12, a decline of 18.3%, and it has not closed above $22 since February 2022.3 ![Line chart of BKLN share price and total return indexed to 100 at March 3, 2011, through Nov. 12, 2026. Total return ends at 179.8 and price at 81.7.](https://storage.ghost.io/c/b8/9e/b89e006c-adc9-4384-b804-e802e23b544e/content/images/2026/11/hys1113_2_price_vs_total_return.png) With distributions reinvested, the same investment is up 79.8%, by my calculation.3 Invesco's own annualized returns on net asset value through Oct. 31 are 4.09% over one year, 5.48% a year over five, 4.26% a year over ten and 3.83% a year since inception.2 A loan is repaid at 100 cents at best and at less when a borrower defaults. Each default removes a little net asset value for good, and the fund pays out all of its income, so nothing is retained to rebuild it. If you spend the distributions, your capital in this fund has shrunk by about 1.3% a year. Against high yield bonds, loans have been the better place to be for five years. From Nov. 12, 2021 to Nov. 12, 2026, BKLN returned 31.3%, the SRLN loan ETF 26.4% and HYG 17.8%.11 Over ten years BKLN returned 53.3% and HYG 55.7%.11 Loans do not beat bonds as a rule. They beat bonds when short rates rise and lose when short rates fall. ![Line chart of total return for BKLN, SRLN and HYG from Nov. 12, 2021 to Nov. 12, 2026, indexed to 100. BKLN ends at 131.3, SRLN at 126.4 and HYG at 117.8.](https://storage.ghost.io/c/b8/9e/b89e006c-adc9-4384-b804-e802e23b544e/content/images/2026/11/hys1113_3_five_year.png) ## Volatility This is where BKLN earns its place. Over the past year, the annualized volatility of its daily total returns was 3.0%, against 4.0% for HYG and 13.7% for the S&P 500 ETF. Over five years the figures are 4.5%, 7.5% and 17.3%.11 ![Bar chart of annualized volatility of daily total returns over one and five years to Nov. 12, 2026 for BKLN, SRLN, HYG and SPY.](https://storage.ghost.io/c/b8/9e/b89e006c-adc9-4384-b804-e802e23b544e/content/images/2026/11/hys1113_5_volatility.png) In 2022, when HYG lost 11.0%, BKLN lost 2.5%. This year through Nov. 12 it has returned 3.1% against 0.3% for HYG.11 ![Bar chart of calendar-year total returns for BKLN and HYG from 2019 to 2026 year to date. In 2022 BKLN lost 2.5% and HYG lost 11.0%.](https://storage.ghost.io/c/b8/9e/b89e006c-adc9-4384-b804-e802e23b544e/content/images/2026/11/hys1113_4_calendar_years.png) Do not read that as safety. Loans change hands less often than stocks, and prices are marked from dealer quotes. When the market stops functioning, the calm disappears. Between Jan. 8 and March 23, 2020, BKLN fell 24.2% with distributions included, slightly more than HYG's 22.0% drop in the same panic.3, 11 Size it for that case. ## Macro Environment My view is that the rate side of this trade is working and the credit side is getting worse. On rates, the Fed has told you what it is doing. The September statement ended with the sentence "The Committee will deliver price stability."4 The overnight SOFR benchmark that loan coupons are built on was 3.66% at the end of July and 3.90% on Nov. 12.5 If the Fed holds or hikes again, BKLN's coupon holds or rises. If the next move is a cut, the income shrinks. On credit, the headline is calm and the numbers under it are not. PitchBook's trailing 12-month payment default rate for the broad loan index was 0.55% by amount in October, below its five-year average of 0.98%. Include the out-of-court restructurings and the rate by issuer count was 2.93%.7 Fitch, which counts defaults more broadly, has the loan default rate at 3.9%.9 The number I watch is the distress ratio, the share of performing loans priced below 80 cents on the dollar. It rose to 8.01% in October from 7.05% in September, the first time above 8% since July 2020.7 A PitchBook analysis in late October put the total at about $131 billion, or 8.3% of the market against 4.3% at the end of last year. Software companies are 12% of the index and 32% of the distressed loans, and 53% of the distressed volume matures within three years.8 Those borrowers have to refinance while the Fed is hiking, and just $34.9 billion of new loans launched in October, 63% less than in September.10 Higher short rates raise BKLN's coupon within about six weeks. They raise the interest bill for every single-B company in the portfolio at the same speed. For a while, the lender wins. If rates stay up long enough, some borrowers cannot pay, and the lender gives back part of the extra coupon as lost principal. ## Distribution Policy BKLN pays monthly and the amount varies. There is no managed distribution plan. The fund passes through the interest it collects, less expenses, and Invesco reports every 2026 payment as ordinary income with no return of capital.2 The most recent distribution was $0.11635 a share, paid Oct. 23\. Multiply by twelve and you get $1.396 a year, or 6.80% on the $20.53 close. The twelve payments through October add up to $1.308, or 6.37%.1, 2, 3 The 30-day SEC yield, which reflects what the portfolio is earning now, is higher at 7.51%, which suggests the payout has room to keep rising if rates hold.2 ![Bar chart of BKLN monthly distribution per share from January 2021 to October 2026, rising from about $0.05 in 2021 to $0.174 in August 2023, falling to $0.101 in June 2026 and rising to $0.116 in October 2026.](https://storage.ghost.io/c/b8/9e/b89e006c-adc9-4384-b804-e802e23b544e/content/images/2026/11/hys1113_1_distributions.png) In 2021, with the Fed at zero, BKLN paid about $0.69 a share for the year. In 2023, after the Fed had taken its target range to a top of 5.50%, it paid $1.82\. Then the Fed cut, and the payout followed: $1.77 in 2024 and $1.46 in 2025.3 The regular monthly payment peaked at $0.174 in August 2023\. October's $0.116 is 14.8% above June's and still 33% below that peak.2, 3 Your income from this fund is a bet on short-term interest rates. In a fixed-rate bond fund, a rate cut raises the price and leaves the coupon alone. Here, a rate cut leaves the price alone and reduces the coupon. If you rely on the check, that matters more than the yield on the screen today. ## Advantages BKLN is the rare income fund that gets paid more when the Fed tightens. The payout has risen four months in a row, and the 7.51% SEC yield is running ahead of the 6.79% distribution rate. Volatility is low. Over the past year it was less than a quarter as volatile as the S&P 500, and it lost 2.5% in 2022 when HYG lost 11.0%. It is liquid and fairly priced. A 0.05% median bid-ask spread and a 0.65% expense ratio are reasonable for a market individuals cannot buy directly. The loans are senior and the positions are small. No holding is more than 1.77% of assets. ## Disadvantages The principal only goes one way. The share price is down 18.3% since 2011\. Loans have no upside beyond par, and defaults subtract from net asset value permanently. The income is not stable. The annual payout went from about $0.69 in 2021 to $1.82 in 2023 and back to $1.46 in 2025\. A Fed that reverses course would cut your check within months. Credit quality is low and being tested. Eight of the top ten loans are rated B+ or lower, the distress ratio just crossed 8% for the first time since 2020, and the fund rebalances only twice a year. The calm is conditional. BKLN fell 24.2% between early January and late March of 2020. ## Conclusion BKLN does what it says. It gives you a diversified, senior, floating-rate claim on the largest leveraged borrowers in the United States for 0.65% a year, and right now that claim pays 6.8% and rising because the Fed is hiking. It is not a place to store capital. It works for an investor who wants income that rises with short rates and will reinvest part of the distribution to offset the slow decline in the share price. It does not work for someone who needs a fixed check, or who would be forced to sell in a month like March 2020. Short-term, the rate side favors BKLN. Long-term, the question is whether a loan market with 8% of its paper in distress can carry a higher interest bill without giving the extra coupon back in losses. I would own it as a rate hedge inside an income portfolio, sized like a credit position, and I would watch the distress ratio more closely than the yield. Annual paying members get a free print copy of The Price of a Quiet Yen or Intermarket Analysis and Investing, Third Edition (retail value up to $44.95, U.S. shipping): [leadlagreport.com/annual](https://leadlagreport.com/annual). If you have read either book, an honest Amazon review helps other readers find it: [The Price of a Quiet Yen](https://www.amazon.com/dp/B0HLZ1YYC6) and [Intermarket Analysis and Investing](https://www.amazon.com/dp/B0HL7CXDLX). ## Notes 1. Perplexity Finance, BKLN quote and price history, accessed Nov. 13, 2026\. 2. Invesco, Invesco Senior Loan ETF (BKLN) product page: fund description, holdings, yields, discount, trading data and distributions as of Nov. 10, 2026; portfolio characteristics as of Nov. 6, 2026; standardized performance as of Oct. 31, 2026\. 3. Yahoo Finance, BKLN historical closing prices, adjusted closes and distributions, March 3, 2011 to Nov. 12, 2026; total returns, annual distribution totals and drawdowns are my calculations. 4. Federal Reserve, FOMC statement and implementation note, Sept. 16, 2026\. 5. Federal Reserve Bank of New York via FRED, Secured Overnight Financing Rate (SOFR), through Nov. 12, 2026\. 6. ICE BofA via FRED, US High Yield Index Option-Adjusted Spread, through Nov. 12, 2026\. 7. PitchBook News (via Yahoo Finance), "Leveraged loan defaults projected to rise," Nov. 5, 2026\. 8. Axios, "A sign the SaaSpocalypse isn't over," Oct. 29, 2026, citing PitchBook. 9. Fitch Ratings, "U.S. Leveraged Loan and High-Yield Default Rates Steady; Risk Extending Into 2027," Oct. 19, 2026\. 10. The Lead (Bloomberg leveraged lending insights), "US Leveraged Loan Primary Market Stalls in 4Q26," Nov. 9, 2026\. 11. Perplexity Finance and Yahoo Finance, HYG, SRLN and SPY quotes, closing prices and adjusted closes through Nov. 12, 2026; total returns and volatility are my calculations. 12. Federal Reserve Board, H.15 Selected Interest Rates, 10-year Treasury constant maturity yield through Nov. 10, 2026\. The Lead-Lag Report is provided by Lead-Lag Publishing, LLC. All opinions and views mentioned in this report constitute our judgments as of the date of writing and are subject to change at any time. Information within this material is not intended to be used as a primary basis for investment decisions and should also not be construed as advice meeting the particular investment needs of any individual investor. Trading signals produced by the Lead-Lag Report are independent of other services provided by Lead-Lag Publishing, LLC or its affiliates, and positioning of accounts under their management may differ. Please remember that investing involves risk, including loss of principal, and past performance may not be indicative of future results. Lead-Lag Publishing, LLC, its members, officers, directors and employees expressly disclaim all liability in respect to actions taken based on any or all of the information on this writing.