Pyxis Funds is making a splash onto the ETF arena with its debut of the Pyxis/iBoxx Senior Loan ETF (SNLN). Formerly known as Highland Funds, newcomer Pyxis will be adding its first ETF to its roster of mutual funds, marking the firms entrance into the ever-expanding exchange-traded universe. The new fund, which began trading on November 7, 2012, will garner the attention of yield-hungry investors looking to diversify their portfolio's fixed-income component .

This product launch is well-timed given the persistent low-yieldenvironmentat home, which has promptedcountlessinvestors to scour the global market for viable sources of worthwhile current income. Furthermore, the new SNLN ETF focuses on a segment of the bond market that remains largely underdeveloped on the ETF front .

Under The Hood: Senior Bank Loans

Senior bank loans have managed to fly under the radar for most as ETFs have only recently opened up the doors to this asset class formainstreaminvestors; the only other product covering this space, the PowerShares Senior Loan Portfolio (BKLN), has managed to attract a whopping $1.2 billion in assets under management since launching in March of 2011 .

This breed of fixed-income securities bears a close resemblance to well-known junk bonds since both asset classes are focused on debt with a below investment-grade credit rating. Senior bank loans separate themselves from traditional high-yield debt in two ways; first and foremost, these privately arranged debt instruments carry less risk since they are secured by collateral in the event of a default. As the name suggests, these loans areconsideredsenior to all other claims against the borrower, which gives them a safer risk profile compared to unsecured junk bonds.

Second, senior bank loans are floating rate debt, which makes them appealing for investors with a long-term horizon. Although rates are ultra-low now, it is inevitable that the Fed will raise rates in the future, which will in turn have a negative impact on fixed-rate debt notes, thereby making senior bank loans quite attractive.

The Pyxis/iBoxx Senior Loan ETF (SNLN) is linked to theMarkit iBoxx USD Liquid Leveraged Loan Indexand charges annualmanagementfees of 0.55%, giving it competitive edge over PowerShares's BKLN, which costs 0.76%.

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Disclosure: No positions at time of writing.