Follow The Banker

Bank-loan funds allow you to capitalize on the nation's need to borrow money

says Morningstar Senior Analyst Scott Berry.

If you invest in a bank-loan fund through a broker, you’ll pay a sales charge, or load. “Among load funds,” says Berry, “Eaton Vance Prime Rate Reserves (EVPRX) has a solid record. Both Eaton Vance and Fidelity have strong research capabilities, which may help them avoid buying bad loans.”

You also should be aware that liquidity might be limited. There is typically a fixed time period, once each quarter, when you can withdraw money from these funds.

Another option may be available to investors who work with a financial planner. “We pool clients’ money so we can get into Columbia Floating Rate Z (XLFZX), where the minimum investment is $250,000,” says Stanasolovich. “The yield in this fund is extremely high [4.7% as of this writing]. Once you’re in the fund, there’s quarterly liquidity, with no minimum for withdrawals.”

BANK-LOAN FUNDS, RETAIL ONLY–SINGLE SHARE CLASS, BY 3-YEAR RETURN
Fund Name Ticker 1-yr.
Return
3-yr.
Return
5-yr.
Return
Phone Minimum Initial
Purchase
Columbia Floating Rate Advantage A XSFRX 21.71 7.97 NA 800-345-6611 $1,000
ING Senior Income Fund A XSIAX 8.82 6.14 NA 800-992-0180 1,000
Columbia Floating Rate A XLFAX 15.85 6.03 NA 800-345-6611 1,000
Van Kampen Senior Loan Fund B XPRTX 18.59 4.89 3.30 800-421-5666 1,000
Oppenheimer Senior Floating Rate A XOSAX 10.83 4.81 NA 800-525-7048 1,000
Merrill Lynch Senior Floating Rate XMPFX 14.50 4.46 4.25 800-654-6837 1,000
Eaton Vance Floating Rate Hi Inc Adv EAFHX 8.46 4.30 NA 800-225-6265 1,000
SunAmerica Senior Floating Rate B XNASX 10.31 4.07 4.54 800-858-8850 5,000
Morgan Stanley Prime Income Trust XPITX 15.76 3.99 4.32 800-869-6397 1,000
Fidelity Advisor Float Rate Hi Inc A FFRAX 5.55 3.87 NA 800-522-7297 2,500
SOURCE: MORNINGSTAR INC. MORNINGSTAR MAKES EVERY EFFORT TO ENSURE THE COMPLETENESS AND ACCURACY OF THIS DATA BUT CANNOT GUARANTEE IT.
DATA THROUGH MARCH 31, 2004
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