Consider diversifying high yield exposure with bank loans
Investors’ preference for high yield at the beginning of the year was beneficial as spreads tightened. But today, I believe bank loans may present a tactical and strategic opportunity for fixed income investors: They may present a more attractive risk profile in a rising interest rate market ahead, and they may have lower exposure to default risk in the energy sector. For investors still unsure if now is the time to get defensive on rates, even a partial rotation out of high yield and into bank loans could capture some of high yield’s gains in recent months while preparing for potential risks ahead.
Learn more about PowerShares Senior Loan Portfolio.
Important information
The S&P/LSTA U.S. Leveraged Loan 100 Index is representative of the performance of the largest facilities in the leveraged loan market.
The BofA Merrill Lynch US High Yield Index tracks the performance of US dollar-denominated, below-investment-grade corporate debt publicly issued in the US domestic market.