August was a positive month for both leveraged loans and CLOs, with carry driving performance and spreads tightening across the capital stack. Leveraged loans returned 0.93%, marking their second-best monthly return over the past year, with a rebound in software loans contributing to performance. CLO issuance and ETF inflows were strong last month, even as AI-related disruption, political uncertainty, inflation, and higher energy prices contributed to volatility across credit markets. August earnings updates were broadly supportive for high-yield credit, and Treasury yields rose across much of the curve. Against this backdrop, we believe CLOs may offer attractive yield pickup relative to credit peers and may be well positioned if interest rates move higher.

For Institutional Investor use only. Past performance is not indicative of future results. All data as of month-end unless otherwise noted. This information is presented for informational purposes only. This is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole investment making decision. CLO, Bank loan, corporate securities, and high yield bonds involve risk of default on interest and principal payments or price changes due to changes in credit quality of the borrower, among other risks. All material is compiled from sources believed to be reliable, but accuracy cannot be guaranteed. The opinions expressed herein are based on current market conditions and are subject to change without notice.