Leveraged Loan Funds Lose $3.9B in March, CLO ETFs Gain $6B
Leveraged loan ETFs, mutual funds and closed-end funds saw AUM fall $3.9 billion to $93.3 billion in March, the eighth straight monthly drop and a total $17.7 billion decline. US CLO ETFs have drawn $6 billion YTD, with AAA tranches’ up-in-quality bias outperforming other loan and investment-grade ETFs.
1. March AUM Contraction
Leveraged loan ETFs, mutual funds and closed-end funds collectively saw assets under management drop by $3.9 billion in March to $93.3 billion, marking the eighth consecutive monthly decline and a cumulative $17.7 billion pullback since August.
2. CLO ETF Inflows
US CLO ETFs have attracted $6 billion of inflows year-to-date, driven by an up-in-quality bias in AAA tranches that has helped these ETFs outperform other leveraged loan and investment-grade funds.
3. Loan Fund Market Share Decline
The share of loan funds in the $1.55 trillion US Leveraged Loan Index fell to 6% in March, the lowest level since November 2009, as CLO vehicles continue to capture a larger slice of the leveraged loan market.
4. April Price Stabilization and Returns
Bid prices for leveraged loans rose four basis points in March to 94.63 and climbed an additional 67 basis points to 95.30 by April 28, delivering a 1.24% return in April and reversing prior weekly outflows with consecutive weekly inflows.