Last year, leveraged loans returned -0.6%, based on the Morningstar LSTA U.S. Leveraged Loan index. This return easily bested the -11.2% for the Bloomberg U.S. Corporate High Yield index.
Leveraged-loan returns rebound this year
Leveraged loans have bounced back this year, returning 3.3%. During the first two months of 2023, high-yield bonds were also in positive territory with a 2.5% return.
Last month, leveraged loans returned 0.6% while high-yield securities lost 1.3%.
Over the past 10 years, leveraged loans generated a 3.9% annualized return vs. 4.1% for the high-yield universe. However, the latter had a 7.5% standard deviation, much higher than the leverage loans' 5.4%.