Looking ahead, concerns about economic impact and inflationary pressures create a complex path for interest rates. Those investors looking for strategies that adapt to a changing rate environment would do well to consider the Eaton Vance Floating-Rate ETF (EVLN ). The fund reaches its one-year milestone this week, boasting an impressive 7.3% yield and over $1 billion in AUM.
U.S. tariffs kicked off with much fanfare this week, with tariffs on Mexico delayed last minute for another month. Uncertainty around tariffs, potential trade wars, and the economic ramifications create heightened uncertainty for investors. Strategies that keep afloat in a complex inflation and interest-rate environment could prove beneficial this year.
Look to EVLN and Floating-Rate Strategies This Year
EVLN is an actively managed senior loan ETF. The fund seeks high current income by investing in floating-rate credit securities, primarily corporate term loans. It also invests in collateralized securitized bonds and high yield bonds.
The fund launched February 6, 2024 and amassed $1.3 billion in AUM as of the end of January. EVLN generated a 30-day SEC subsidized yield of 7.33% as of January 31, 2025. The fund also offered a distribution rate of 7.78% as of December 31, 2024. Distribution rate annualizes the most recent distribution and divides by the fund’s NAV. It’s the annual amount an investor would earn if the most recent distribution held steady at the same amount.
The fund applies a systematic risk-weighted investment strategy to analyze the risk and return of securities. An issuer’s operating history, financial resources, and sensitivity to the economic macro environment and trends are considered when determining quality. The fund’s managers also look at a company’s management capabilities, and relative values using expected cash flow, earnings potential, and more.
The interest rate on the senior loans invested is reset periodically, using a base lending rate as a reference, plus a premium. Senior loan strategies offer exposure to potentially elevated yields in below-investment-grade quality loans, while mitigating risk. In the event of bankruptcy, senior loans are repaid first. The majority of the securities held (68.01%) rated B in quality as of the end of December.
EVLN seeks diversified senior loan exposure by investing across a range of industries and borrowers. Software (13.51%), machinery (6.28%), and hotels, restaurants, and leisure (5.71%) made up the largest sector exposures by weight, as of December 31, 2024.
EVLN carries an expense ratio of 0.60%.
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