Legg Mason subsidiary Western Asset has launched a senior loans fund that aims to offer protection against rising interest rates.
Western Asset, which has $436bn (£272.8bn) under management, said the fund would aim to maximise total return by investing in a diversified portfolio of senior bank loans, and would also offer exposure to debt securities and non-investment grade securities and loans.
The company added that leveraged loans have a low correlation with equities or investment-grade bonds, meaning they help investors to diversify their existing portfolio.
“The fact the fund offers an income yield using floating rate coupons – offering protection against rising interest rates – is a key benefit, while senior loans’ place at the top of an issuer’s capital structure means they are more likely to have higher recovery rates than bonds,” Adam Gent, head of UK sales at Legg Mason, said.
“We believe the fund will appeal to investors seeking an alternative to traditional fixed income strategies at a time of significant uncertainty for the market.”