ETF Bond Type: Bank Loans ETFs that focus on bank loans are relatively new but have already become popular with investors. Also known as "leveraged loans," these are loans that are made to companies with below-investment-grade credit ratings. Because they are considered to be higher risk, these loans typically offer higher interest rates than other types of debt. ETFs offer exposure to a basket of these loans, which helps to diversify the risk. And because ETFs trade on an exchange, they can be easily purchased and sold, making them a convenient way to invest in this asset class.