After 2-Month Slide, Assets at US Leveraged Loan Funds Jump in January

US loan fund AUM

After a lackluster stretch during the second half of 2017, U.S. loan fund assets under management grew by $1.82 billion in January, benefiting from the largest retail investor cash inflow into the asset class since May and a resurgent secondary.

As of Jan. 31, loan fund AUM was $158 billion, the most since August 2014, according to Lipper and LCD.

There were two main reasons for the renewed asset growth:

  • Retail investors returned to the U.S. loan market in January, prompted by a rising base rate underlying the asset class: LIBOR recently topped 2%, the highest it’s been in nine years. Helping that sentiment, the broader capital markets remains relatively bullish regarding Fed rate hikes, which typically benefit a floating rate asset class such as leveraged loans. The consensus continues to have three rate hikes in 2018, and market chatter regarding a fourth rate hike before 2018 ends is emerging (the odds of such a move are currently roughly 30%, according to CME Group)
  • The leveraged loan secondary improved by 63 bps in January, boosting loan fund AUM by a hefty $1 billion, according to the S&P/LSTA Loan Index (of course, investors continue to struggle to put all that cash to work)

Try LCD for Free! News, analysis, data

Follow LCD on Twitter.

LCD comps is an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

Leave a Reply

Comments are moderated and will not appear until the admin has approved them.