Leveraged Loan Funds Lag Behind Benchmark as Inflows Fade
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U.S. mutual funds that focus on speculative-grade corporate loans are underperforming a benchmark as investors stage the biggest retreat from the market since 2011 and regulators warn of lax underwriting standards.
Returns of 2.1 percent this year for such funds tracked by Morningstar Inc. are falling short of the 2.5 percent gain in the Standard & Poor’s/LSTA U.S. Leveraged Loan 100 index. In all of last year, the funds rallied 5.7 percent, versus 5 percent for the gauge.