Many SR Loan funds have seen a recent negative divergence from NAV- this is due to market sentiment. Some of this is due to stagnant and falling Fed interest rates and warnings from Yellen about credit bubbles in SR Loan and Junk Bonds. These funds should outperform as interest rates rise, provided there is not a deterioration of credit fundamentals of the underlying fund holdings. Watch the NAV and credit quality of the holdings- if these stay put, sentiment will eventually swing back so the ETF price is closer to NAV. In the meantime, enjoy the income- your DRIP is letting you buy more shares with your distributions. Eventually the party will return to this sector.
Thank you infoonstocks. I am not to worried. The sell off was only 1%, and the price is already recovering. I agree this is a good hedge against rising rates, but only up to a point. If rates rise significantly, it would reduce credit quality. That is why I think the Fed simply cannot allow rates to rise very much. There is just too much debt in the system, and the system cannot afford to pay significantly higher rates.