- The loan space continues to see inflows which should be supportive of NAVs. As NAVs increase, they can increase leverage supporting distributions.
- Loan funds remain one of the cheapest asset classes in the CEF spectrum with five-year z-scores that are barely positive.
- We like KIO and ARDC which are hybrid funds (half loans, half fixed coupon bonds "HY") but they can be a little junkier.
- Another option is that the market is giving us another opportunity to own PHD. It moved to a -3% discount but has recently retraced a bit back to -6.4%.
For further details see:
CEF Analysis: Senior Loans Look Best Positioned