Alternative credit interval funds delivered average returns of 10 per cent last year, according to new research from advisory firm Gapstow.
According to the Gapstow Alt Credit Interval Fund Composite Index, broadly syndicated credit funds returned 8.6 per cent last year, while structured credit returned 12.6 per cent and direct lending delivered 8.7 per cent.
Multi-strategy credit funds returned 10 per cent, giving an average return of 10 per cent across all alternative credit interval funds in 2024.
Read more: SC Lowy to launch interval fund amid private credit pivot
Gapstow also reported that its hedge fund composite index increased by 9.6 per cent last year, led by convertible bond funds and structured credit funds, particularly those focused on collateralised loan obligations (CLOs). Meanwhile Gapstow’s listed fund composite index increased by 7.9 per cent, led by business development companies.
Gapstow added that all of its major credit indices were positive last year. The firm’s corporate broadly syndicated loan and high yield bond indices delivered a total returns of 8.1 and 8.2 per cent, respectively.
Meanwhile, the best performing securities, which had mid-teens performance, were lower rated tranches of CLOs and commercial mortgage-backed securities (CMBS).
Read more: Raymond James to launch private credit interval fund
Residential mortgage-backed securities were a relatively underperforming credit sector, thanks to persistently wide spreads and declining mortgage originations.
“In 2024, strongly contacting spreads and slightly rising long-term interest rates dominated US credit market dynamics, continuing last year’s trends,” Gapstow stated in its 2024 Performance Report.
“Amidst this supportive market environment, credit fund peer groups delivered strong returns across all quarters in 2024.
“Overall, alternative credit investment funds produced strong results in 2024, reflecting the broader credit markets.”
Gapstow’s indices collectively track more than 200 funds in the alternative space, including interval funds, hedge funds, and listed funds.
Read more: John Hancock and Manulife launch multi-asset credit interval fund
