Beyond income: Resiliency, liquidity and alpha potential in the U.S. senior loan market

U.S. senior loans offer more than just high income, and the current market environment reinforces their strategic value. With attractive all-in yields, near-zero duration and an active secondary market, this asset class earns a distinct role in diversified portfolios.

Key takeaways:

• Senior loans generate some of the highest income across public fixed income today, with base rates expected to remain higher for longer supporting the durability of that income.
• The U.S. loan market has demonstrated resilience across a range of rate environments, generating positive total returns across most years on record, including periods of both rising and falling rates.
• Rising dispersion across issuers and sectors is creating a favorable backdrop for active management, where credit selection is playing an increasingly important role in outcomes.
• Broadly syndicated loans complement private credit allocations by offering exposure to a similar part of the capital structure with the added benefits of real-time pricing and a deep secondary market.
• This is not a beta-driven market. Credit selection and active management are increasingly the primary drivers of outperformance.