Alternative credit funds generated positive total returns in the second quarter despite concerns surrounding semi-liquid, US retail-focused funds, new research has revealed.
Research by New York-headquartered alternatives adviser Gapstow found that nearly all credit fund strategies delivered positive total returns, with typical performance ranging between two and three per cent.
Overall, the research found that collateralised loan obligations produced the strongest average returns, at 4.5 per cent, while listed commercial real estate mortgage REITs were the weakest performers, returning -5.1 per cent.
The report also tracked business development companies (BDCs) and the net asset value (NAV)-based total returns of listed BDCs. It found that listed BDCs delivered a positive 2.9 per cent NAV-based total return during the second quarter.
The findings come as retail-focused BDCs have experienced elevated redemption activity over the past two quarters, driven by concerns over lending standards in private credit and growing fears that artificial intelligence could undermine the software sector, an area to which the asset class has significant exposure.
Gapstow’s research tracked the performance of more than 20 alternative credit fund strategies across three types of investment vehicle: hedge funds, interval funds and listed funds.
