Post by yogibearbull on Nov 27, 2023 19:22:11 GMT
These low-rated/junky FR/BL funds have been very popular with investors. They also have done quite well recently as rates have risen.
Now, the SEC wants to kill them. Of course, not by direct hits.
But 2 pending rules will just about do that: (1) The SEC wants to classify (junky) FR/BL as illiquid, (2) Funds would be restricted to having 15% in illiquid assets.
Well, (junky) FR/BL funds have about 80% in (junky) FR/BL. As it is now, these junky FR/BL securities take 7+ days to settle, and these funds have managed that fine during the GFC and pandemic. So, the fund industry is asking, what is the problem here?
Sorry about what may appear to be overdoing "junk" adjective, but now there are also other kinds of FRs - Treasury FRNs (top grade), corporate FRs (mostly investment-grade). But it is the (junky) FR/BL that the SEC is talking about.
ICI Alert www.ici.org/viewpoints/23-view-sec-bank-loan-funds
Now, the SEC wants to kill them. Of course, not by direct hits.
But 2 pending rules will just about do that: (1) The SEC wants to classify (junky) FR/BL as illiquid, (2) Funds would be restricted to having 15% in illiquid assets.
Well, (junky) FR/BL funds have about 80% in (junky) FR/BL. As it is now, these junky FR/BL securities take 7+ days to settle, and these funds have managed that fine during the GFC and pandemic. So, the fund industry is asking, what is the problem here?
Sorry about what may appear to be overdoing "junk" adjective, but now there are also other kinds of FRs - Treasury FRNs (top grade), corporate FRs (mostly investment-grade). But it is the (junky) FR/BL that the SEC is talking about.
ICI Alert www.ici.org/viewpoints/23-view-sec-bank-loan-funds