State Street Investment Management announced the launch of the State Street SPDR S&P Leveraged Loan ETF (LVLN) on November 18 2025. The new ETF tracks the S&P USD Select Leveraged Loan Index and carries a 0.40 % gross expense ratio, the lowest among U.S. leveraged‑loan ETFs.
Leveraged loans have become a key source of yield for institutional investors, with the U.S. leveraged‑loan market now exceeding $1.5 trillion in outstanding debt and growing at a compound annual rate of roughly 10 % over the past five years. The index that LVLN tracks includes only USD‑denominated loans of at least $500 million, ensuring broad market representation while filtering for liquidity and credit quality.
State Street’s strategy is to offer both active and index‑based solutions in the fixed‑income space. Chief Business Officer Anna Paglia noted that “investors seeking income and diversification continue to turn to leveraged loans, which have historically shown a low correlation to Treasuries and investment‑grade corporates. With LVLN, our fixed‑income ETF lineup now includes both active and index‑based strategies to meet client needs for gaining access to the fast‑growing leveraged‑loan market.” The low expense ratio positions LVLN as an attractive entry point for cost‑conscious investors.
In a crowded market, other leveraged‑loan ETFs such as the iShares Leveraged Loan ETF (LLN) and the SPDR Leveraged Loan ETF (SLN) charge 0.55 % and 0.60 % respectively. LVLN’s 0.40 % fee therefore offers a 20‑30 basis‑point advantage, potentially drawing investors who are sensitive to management fees while still seeking exposure to the high‑yield, low‑correlation asset class.
Leveraged loans carry inherent risks that investors must weigh. Credit default risk is higher than for investment‑grade bonds, and many leveraged loans are covenant‑lite, limiting borrower oversight. Liquidity can be a concern, as settlement for leveraged loans can take up to three weeks, creating a mismatch between the real‑time trading of ETFs and the underlying loan market. Variable interest rates provide some protection in a rising‑rate environment but also add interest‑rate risk.
The launch signals State Street’s confidence in the continued expansion of the leveraged‑loan market and its commitment to providing investors with a cost‑effective, diversified fixed‑income option. By combining a low expense ratio with a broad, liquidity‑filtered index, LVLN is positioned to capture the growing institutional appetite for higher‑yield, low‑correlation assets while managing the credit and liquidity risks that define the leveraged‑loan space.
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