UnaVida | Senior Loan Funds for your investment portfolio?

Senior Loan Funds for your investment portfolio?

Senior Loan Funds – These are not loans made to OAP’s but large, ultra-short duration loans made to non-investment grade businesses primarily in the U.S. and Europe.

Senior loans are classified as non-investment grade assets, so they typically pay a higher rate of interest than other short-term debt instruments. This rate of interest is based on a fixed spread over a base rate, which floats with market rates and resets every 45-60 days on average. Unlike high yield bonds, senior loans are secured by collateral and hold the highest rank in a borrower’s capital structure, giving them priority over other creditors, bonds, and all preferred and common stock.

The unique combination of floating rates and secured collateral helps senior loans complement fixed-income portfolios and can provide valuable portfolio diversification for institutional investors.

Have your advisers incorporated this type of fund in your investment portfolio ?

Typically these funds are hedged and so care is required when you select the particular fund that is suitable for you, as always take advice.


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The opinions expressed by Ray Best are meant to inform and educate. Before making any investment decisions always take advice that is pertinent to your investment personality and financial situation.

You are aware that past performance will not necessarily be repeated in the future, but you should be aware that persistent poor performance invariably will.

The value of an investment and the income from it could go down as well as up.

The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

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