What Explains the Outperformance of Loans?

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About This Episode

Guessing the direction of interest rates is no easier than any other tactical or market timing decision. The yield on the benchmark 10-year Treasury note is just under 3.9%. That is about 100 basis points less than it was a few months ago. Fed policy is uncertain, inflation has not been fully controlled, and fiscal deficits loom as a long-term risk for yields to go higher.

Those factors argue in favor of an allocation to floating-rate notes. My guest today will help us explore this asset class, its opportunities and its risks.

About Our Guest

Jake Lemle, CFA, is managing director, head of loan trading & capital markets, and a portfolio manager at Morgan Stanley Investment Management.

Jake is a managing director of Morgan Stanley Investment Management Fixed Income, head of loan mtrading & capital markets and portfolio manager on the floating-rate loan team. He is responsible for trading high-yield loans and bonds for the senior debt group as well as public funds, separate accounts, commingled institutional accounts and structured products. He also has responsibilities for buy and sell decisions, portfolio construction and risk management. He began his career in the investment management industry with Eaton Vance in 2007. Morgan Stanley acquired Eaton Vance in March 2021. Jake earned a B.S. from Georgetown University. He is on the board of directors of Artists for Humanity in South Boston and a member of the Acquisitions Circle of the Institute of Contemporary Art, Boston. He is a CFA charterholder.

Show Notes

Here are some links to learn more about EVLN and Eaton Vance

Eaton Vance Floating-Rate ETF

All Eaton Vance ETFs

Data as of: February 2, 2024

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These restrictions may impede the Fund's ability to buy or sell loans (thus affecting their liquidity) and may negatively impact the transaction price. It may take longer than seven days for transactions in loans to settle; therefore the Fund may hold cash, sell investments or temporarily borrow from banks or other lenders to meet short-term liquidity needs. Loans to entities located outside of the U.S. may have substantially different lender protections and covenants as compared to loans to U.S. entities and may involve greater risks. Loans may be structured such that they are not securities under securities law, and in the event of fraud or misrepresentation by a borrower, lenders may not have the protection of the anti-fraud provisions of the federal securities laws. Loans are also subject to risks associated with other types of income investments. 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