The AIG Senior Floating Rate Fund invests primarily in bank loans to offer the potential for high current income and protection from rising interest rates. As interest rates increase, the loans’ adjustable coupons are structured to reset, providing attractive dividend yield and a hedge against interest rate risk.
With rates expected to continue increasing, bank loans may help diversify your portfolio and provide the opportunity for high income and capital appreciation. As illustrated below, this asset class has historically outperformed more traditional bond investments during rising interest environments.
Source: Credit Suisse, Bloomberg Barclays
Past performance does not guarantee future results.
Periods of rising interest rates are defined as periods when the Federal Funds rate increased by more than 100 basis points. In periods with flat-to-declining interest rates, cumulative returns for bank loans and bonds were as follows: 5/95-4/99: Bank Loans 31%, Bonds 37%; 10/00-4/04: Bank Loans 19%, Bonds 30%; 9/06-11/15: Bank Loans: 44%, Bonds: 53%.
Bank loans are represented by the Credit Suisse Leveraged Loan Index, which is a market value-weighted index designed to represent the investable universe of the U.S. dollar-denominated bank loan market. Bonds are represented by the Bloomberg Barclays U.S. Aggregate Bond Index is comprise of government securities, mortgage-backed securities, asset-backed securities and corporate securities to simulate the universe of bonds in the market. The maturity of the bonds in the index is over one year. Please note an investor cannot invest directly in an index.
COMBINE THE POTENTIAL FOR HIGH INCOME WITH
LOW INTEREST RATE RISK
Talk to your financial advisor to learn more about the AIG Senior Floating Rate Fund.