US leveraged loans have continued their strong returns in 2024, with a 1.7% rise for the Morningstar LSTA US Leveraged Loan Index quarter to date and an 8.4% rise year to date as of Dec. 2. Similarly, the Morningstar US High-Yield Bond Index is also well into positive territory this year; the index is up 0.7% quarter to date and 8.8% year to date. In 2023, the loan index notched a 13.3% annual return, while the high-yield bond index notched a 13.5% annual return.
Katie Binns – Director, Fixed Income & Multi-Asset, Morningstar Indexes
“US leveraged loans have continued to rally in 2024, fueled by strong demand from institutional and retail investors, as well as limited supply keeping secondary prices strong. Looking beyond performance, leveraged loans can play an important role in a well-diversified fixed-income portfolio. Their floating rate capability means they are less sensitive to interest rate changes, and they are typically less volatile than traditional fixed-rate instruments.”
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