Bank Loans Position Paper

June 14, 2019 | Ben Mohr, CFA, Director of Fixed Income

Bank loans represent a key strategic asset class for most institutional investors’ fixed income portfolios. Some of the critical benefits of bank loans include yield that is typically greater than that of core bonds, a floating rate and therefore very little interest rate risk, and a senior secured level in the debt capital structure of issuers such that default risk is minimized and recovery rates are maximized. This position paper covers the history of the asset class as well as some unique characteristics that make it a vital part of many institutional investors’ portfolios. We will also examine its historical returns and correlations with other asset classes, as well as its risks ranging from credit to liquidity risk and interest risk to reinvestment risk. We will conclude with an assessment of its recent valuations as well as how to access this asset class.

Download PDF >

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

 

Ben Mohr, CFA
Director of Fixed Income

Get to Know Ben

Related Content

08.16.2019

All is Not Lost for 2019

Given this week’s volatility driven by (brief) yield curve inversion, the ongoing U.S.-China trade dispute, disappointing economic data from Germany,…

08.14.2019

The Yield Curve Inverts: Time to Hunker Down?

This morning, the key range of the U.S. Treasury yield curve that is viewed as the bellwether of recessions —…

08.01.2019

Stoking the Fire: The First Post-Recession Rate Cut

On July 31, 2019, the Federal Reserve cut interest rates for the first time since the 2008 Financial Crisis from…

07.25.2019

Second Quarter Review of Asset Allocation: Risks and Opportunities

Overall, the second quarter was positive for financial markets, thanks to strong economic fundamentals and expected Fed stimulus. Unemployment remains…

07.19.2019

Real Estate: Where Do We Go From Here?

Over the last ten years, core real estate as measured by the NFI-ODCE has delivered an annualized return of almost…

07.17.2019

When Will the SOFRing End?

Global authorities such as the SEC, Federal Reserve, European Commission and European Central Bank are currently transitioning the market’s use…

More articles

Subscribe to Research Email Alerts

Research Email Alert Subscription

Research alerts keep you updated on our latest research publications. Simply enter your contact information, choose the research alerts you would like to receive and click Subscribe. Alerts will be sent as research is published.

We respect your privacy. We will never share or sell your information.

Thank You

We appreciate your interest in Marquette Associates.

If you have questions or need further information, please contact us directly and we will respond to your inquiry within 24 hours.

Contact Us >