Bank loan fund: the biggest, the best and three of the rest
Most successful player
Paul Gillin and John Blaney
Floating win rate
Bank loan funds have seen the same plunge and rebound pattern as other corporate bond funds this year. While their variable rate component has lowered their rates since the start of the year, it also offers them some protection against inflation in the event of a rise in rates.
Two managers who have successfully managed the fluctuating nature of this category are Paul Gillin and John Blaney of Park Avenue Institutional Advisors. Citywire’s AA-rated managers under-advise the Victory Floating Rate fund by $ 501 million and lead their category for their three-year risk-adjusted performance through the end of July.
They are leading the strategy alongside Kevin Booth, who is rated A and has a slightly lower management ratio of 0.25 as he is listed on an additional fund.
The volatility of the Victory Floating Rate fund was among the highest in the category, but the returns obtained by the managers made it an attractive option as its Sharpe ratio of 0.27 was the fourth best among its peers. According to Morningstar, the fund has 23% of its assets in credits rated below B, more than triple the category average of 7.5%.
Booth has been with the fund since 2009, while Blaney and Gillin joined in 2013 and 2014 respectively.
|MOST PERFORMING PLAYER||VS||GIANT CATEGORY|
|PAUL GILLIN & JOHN BLANEY
FLOATING RATE OF VICTORY
EATON VANCE VARIABLE RATE ADVANTAGE
|1/84||3-year risk-adjusted ranking||20/84|
|$ 501 million||Fund size||$ 5.5 billion|
|8.7%||Total returns over 3 years||5.6%|
Advantage of the Eaton Vance Variable Rate
From the top performers, we move to the largest manager in the category in terms of total assets. Craig Russ manages more than $ 10.4 billion through the Calvert Floating Rate Advantage, Eaton Vance Floating Rate Advantage, and Eaton Vance Floating Rate funds.
This is a tough category to outperform, as evidenced by Russ’s -0.01 management ratio for its three-year risk-adjusted performance.
A negative manager ratio means that the manager has failed to outperform a benchmark. This could be the result of the mad rush the lowest rated credits have been on this year. After plunging until the end of March, the CCC-rated portion of the index has rebounded the most since then. A conservative manager who does not participate in this part of the market could see his performance suffer.
Russ’s largest fund is the $ 5.4 billion Eaton Vance Floating Rate Advantage fund. He has managed the fund since late 2007 and was joined by Andrew Sveen early last year.
The fund is the third largest fund in the category, behind its peers Fidelity and Lord Abbett. It has received a five-star Morningstar rating for its volatility-adjusted returns and a Bronze analyst rating, which means analysts believe it has a reasonable chance of beating its benchmark over time.
Three more to watch …
All data as of July 31, 2020. Source: Citywire Discovery / Morningstar Direct.