Senior loans offer a number of advantages to a fixed income investor.
Potential protection from rising rates. Because the coupons on senior loans are reset frequently, they typically don’t experience the price declines that affect bonds when interest rates rise.
Attractive income: Loans may also provide an attractive income to investors who hold more conservative investments.
Solid returns over most interest rate environments. Senior loans have delivered solid returns during periods of rising and falling interest rates.
Lower duration and less volatility: The duration of senior loans is close to zero because their coupons reset frequently. As a result, their prices are less volatile than high yield bonds or equities. Adding senior loans to a fixed income investor portfolio may help lessen volatility.
Oppenheimer Senior Floating Rate Fund seeks to invest in senior loans issued by companies with leading market share, innovative products, valuable assets and well-regarded management. A fundamental, bottom-up (security-by-security) investment process is used to evaluate the ability of issuers to service their debt. The Fund’s goal is to identify opportunities that are attractively valued relative to their risks.