- Investor participation in the US predates that of Europe, but institutional investors have steadily recognised the benefits of making a strategic allocation to European leveraged loans
- The performance of European loans typically offers a premium over time and, while liquidity is more limited compared to the US, it is tolerable by the pension funds and insurance companies that commonly allocate to the market over a cycle
- For investors looking to diversify away from dollar debt, European loans should be noted for their high running income (enhanced by the presence of zero floors), defensive features and relatively stable returns.
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The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested.