STRATEGIES

Bank Loans

Philosophy

BlackRock's bank loan platform encompasses a suite of active strategies that seek to deliver consistent, risk-adjusted returns across market environments through access to attractive floating-rate investments.

Our bank loan strategies emphasize dedicated fundamental research of securities and sectors in efforts to uncover relative value and provide optimal risk-adjusted returns. The strategies seek to outperform their benchmarks while reducing credit-specific risk by overweighting higher-quality assets.

Investment process

BlackRock's approach to bank loans brings together the firm’s resources, including credit analysts, investment and portfolio managers, and risk analytics personnel. Our process emphasizes fundamental credit analysis and is structured to facilitate the identification of attractive new investments and to help ensure disciplined review of all existing holdings. Key elements include:

  • An extensive bottom-up review of each issuer, targeting companies with strong underlying fundamentals, good cash flow and solid capital structures.
  • A top-down overview of the corporate markets to identify industry sectors that we believe are overvalued or undervalued based on the economic cycle, industry trends and regulatory issues.
  • Portfolio diversification to minimize exposure to any individual credit.
  • Incorporation of equity market inference techniques. Equity trends are monitored as a signal of potential problems or opportunities for sectors or issuers.
  • An active management approach stressing flexibility in the reallocation of investment as appropriate.

Investors with the following objectives may find an allocation to bank loans worth considering:

  • Seeking to gain exposure to floating-rate securities in pursuit of generating consistent, risk-adjusted returns throughout market environments and interest rate regimes.
  • Seeking to reduce the duration risk of a fixed income portfolio without sacrificing current yield.
  • Seeking to allocate to a fixed income asset class with historically low (or negative) correlations to investmentgrade bonds and US Treasuries.

Leadership

Joshua Tarnow
Head of Global Long Short Credit & Head of Aviation