The loan space has been beaten down over the past month with prices sliding due to outflows, increased risk aversion to non-investment grade paper and lower short-term rates. In this article we take a look at this sector to see whether it can play a role in investor portfolios. Our takeaway is that firstly, higher-risk sectors can often play a useful role in income portfolios provided they are counterbalanced by higher-quality assets. And secondly, allocating to higher-risk sectors like loans can still be done with a quality tilt alongside margin of safety considerations. We highlight