Treasury yields jumped to the highest level in more than a decade this week as traders adjust to the likelihood of a “higher-for-longer” rate environment. That appears to be pushing investors into an exchange-traded fund with some built-in cushion against higher rates. The Invesco Senior Loan ETF (BKLN) has seen nearly $400 million in inflows over the past week, according to FactSet, and is outperforming many major stock and bond funds this month with a decline of less than 1% in September. BKLN 1M mountain The BKLN is outperforming in September. The fund buys and holds loans made by banks and other financial institutions, which often have floating interest rates. That means the fund is less susceptible to interest rate risk than competitors that buy bonds with fixed yields. The interest in the fund is a notable shift from earlier this year. The fund has pulled in $789 million of inflows over the past month, FactSet data shows, but it had seen net outflows year to date prior to that. Due in part to its high payout — the fund has a 30-day SEC yield of nearly 8.5% — the BKLN has a total return of 9.31% year to date, according to FactSet. For comparison, the iShares 3-7 Year Treasury Bond ETF (IEI) has a total return of about -0.2%. Most of BKLN’s top holdings are set to mature within that same three- to seven-year window. The outperformance isn’t explained just by the different risk profiles of Treasurys versus corporate debt. The Vanguard Total Corporate Bond ETF (VTC) has a total return of less than 1% year to date. Many loans in the BKLN portfolio would be considered junk bonds. The market for bank loans is less liquid than the Treasury market, which means prices could fall more quickly during times of stress. If the Fed were to cut rates, the BKLN would likely underperform and see its payouts decrease. The fund’s management fee of 0.65% is also above that of many funds that track indexes of Treasurys and broader corporate debt.