The role of bank loans in a diversified portfolio
Key takeaways
Asset class size
The market capitalization of the bank loan asset class is now roughly equivalent to that of high yield credit in both the US and Europe.
Risk-reward
The bank loan asset class occupies a place in the risk-reward space somewhere between cash and high yield.
Ideal environments
Our analysis suggests that the best environments for bank loans are the recovery after recession and a prolonged economic upswing that brings rising central bank rates but low defaults.
We are often asked for a view about bank loans, in particular how we would fit them into our asset allocation framework. This paper answers those questions and discusses whether and how to integrate loans into our forecasting and Model Asset Allocation processes.
Strategies
Private Credit
Invesco Private Credit is one of the world’s largest and longest-tenured private credit managers. We leverage a consistent, conservative fundamental credit process to pursue opportunities across broadly syndicated loans, direct lending, and distressed debt and special situations.
