How do performance metrics of European leveraged loans compare against the broader market – last 10 years of data reviewed

An analysis of European Leveraged Loans’ performance metrics

The Mandatum Asset Management white paper explores the performance and characteristics of European leveraged loans over the past decade, highlighting their resilience and value in diversified portfolios. Leveraged loans have delivered steady returns with lower volatility compared to other asset classes, such as high-yield bonds and investment-grade credit. This stability stems from their floating rate nature, short duration, and robust institutional demand, which reduce sensitivity to market fluctuations.

The analysis shows that leveraged loans performed well during periods of market stress, such as the 2020 pandemic and the 2022 rate hikes, recovering faster and sustaining smaller drawdowns than other fixed-income instruments. Additionally, their low correlation with equities and other markets enhances portfolio diversification, while offering competitive risk-adjusted returns.

This white paper underscores the potential of European leveraged loans as a resilient and attractive asset class for long-term investors seeking steady performance and reduced volatility.