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What are bank loan funds telling us?

JunksterJunkster
edited July 13 in Fund Discussions
When they are behaving, I use a bank loan fund in lieu of cash. I only have 10% there but may add to it from my other positions. 7% is a nice yield in addition to some nav price appreciation. The past month bank loans have been rock solid and outperforming most other bond categories and some of the better known bond funds such as PIMIX, RCTIX, SEMMX, etc. I am not completely sure why. Maybe higher for longer in rates because of stubborn inflation, maybe a stronger economy benefitting bank loan fundamentals, who knows. We may get some answers this week as we have two major inflation reports coming out, Some are saying they may be the first to reflect the impacts of the tariffs. Stay tuned. Personally, for the sake of my other positions which are outperforming bank loans I hope both reports are benign. But “hope” rarely wins in this game,

Comments

  • WABACWABAC
    It has been hard not to notice etf's like FLTR and FLOT if you like a higher rating and lower volatility in your floaters. I am not aware of mutual funds that follow similar strategies to the two etf's mentioned.
  • hank
    edited July 13
    ”Maybe higher for longer in rates?

    That would be my guess. It’s a near certainty Powell will be replaced with a more liberal Fed chair hell-bent on cutting rates at the short end when his term expires in May (if he doesn’t quit sooner). To the extent that could spur both growth and inflation, rates farther out on the curve would probably rise. So possibly you’re observing some early positioning for what appears an eventuality.
  • JunksterJunkster
    edited July 13
    WABAC said:

    It has been hard not to notice etf's like FLTR and FLOT if you like a higher rating and lower volatility in your floaters. I am not aware of mutual funds that follow similar strategies to the two etf's mentioned.

    Not a fan of ETFs overall ( you can’t benefit for the sometimes one day lag ) and especially FLTR and FLOT. The later are way too conservative and not my cup of tea. But that is just me. Just compare their 3 year performance or longer with the OEFs. I realize they can play a role in many investors’ portfolios, just not mine.

    Open this link to see the power of floating rate funds. For conservative investors a real thing of beauty with almost zero volatility and with no annual losses. Unfortunately a bank loan fund out of India.

    https://www.morningstar.in/mutualfunds/f000002r3h/aditya-birla-sun-life-floating-rate-fund-regular-plan-growth/performance.aspx
  • WABACWABAC
    At the present time I am remaining extremely conservative with my retirement funds, which I have yet had to tap into. That allows me to not worry about the taxable account which is as fully invested in equity funds as it has ever been.

    At the present time, I like to pair conservative funds with risky funds since I am too lazy to want to be an active trader. So, if I pick up a bank loan fund then I will likely also pick a more conservative floater. It should be noted however that in 2022 FFRHX, for one, only lost .31. Still, FLTR and FLOT ended in the black that year.

    It's always interesting to bounce ideas off you @Junkster.

  • DrVenture
    Appreciate the notice on BL funds.
  • CharlesCharles
    edited July 15
    Thank you Junkster.

    Below are top dozen Loan Participation funds the past 10 months (through June), based on total return. No Interval Funds. No ETFs. No CEFs. Drawdown -0.5% or less, month ending data. Sorted by return. (Click image to enlarge.)

    Their tickers: RCRIX, DFLIX, CFRIX, RPIFX, NFRIX, DBFRX, DDFLX, NFIIX, PRFRX, RFRAX, SFHIX, LGRYX.


    image

    image

  • FD1000
    Unfortunately, the above chart is a monthly one.
    RCRIX fell 2% in April 2025.
    DFLIX and CFRIX fell even more from their highs in February to the bottom of April.
  • CharlesCharles
    edited July 16
    Right. I completely understand. I use table above in MULTISEARCH to screen for funds at top level, then watch daily via the FLOW tool. The FLOW tool was built for daily trader insight! (Click image to enlarge.)


    Daily FLOW Chart - RCRIX Thru Monday, 14 July 25

    image
  • yogibearbullyogibearbull
    edited July 16
    Recently added (04/2025- ) daily data capability (when the data are available) is great for FLOW.
  • a2z

    other than hoping to best pick a representative fund, are there any tricks to getting better flow information at the sector and asset level ? (e.g, global chemicals, gold, ....)
  • DrVenture
    Well, the various BL charts got my attention. I moved some cash from a MMF to a BL fund to see how it plays out.
  • CharlesCharles
    edited July 18
    @DrVenture. These funds have certainly held up the past few years. Since January 2022, beginning of the current Great Normalization market cycle, all returned about 6% annually despite drawdowns in 2022 from -3% to -6%. Since COVID in January 2020, most returned about 5% annually, but incurred drawdowns of -11% to -15%.

    I expect Junkster (and FD1000), however, would exit once any of these rolled more than a percent or so, if that.
  • DrVenture
    @Charles Thank you. I will keep a close eye on them.
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