A Share: IIMAX / C Share: IIMCX / I Share: IIMWX

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About Private Credit

The Bluerock High Income Institutional Credit Fund seeks to accomplish its objectives by investing, directly and indirectly, in private credit through managed pools of diversified Senior Secured Loans known as Collateralized Loan Obligations (CLOs).

Senior Secured Loans: Potential Portfolio Enhancement
Where do Senior Secured Loans fit in a portfolio?

Senior Secured Loans have been a resilient, multiple market cycle-tested asset class delivering both high current income and defensive characteristics, while fitting within a broadly diversified fixed income strategy.

Senior Secured Loans are Issued by Large, Well-Known Companies with Stable Market Demand

Senior Secured Loans typically provide financing for business needs, mergers and acquisitions related transactions or capital expenditures to many recognizable companies, such as the following:

Sample Underlying Issuers2

Fund Percent: 0.20%

Fund Percent: 0.26%

Fund Percent: 0.44%

Fund Percent: 0.36%

Fund Percent: 0.38%

Fund Percent: 0.05%

Fund Percent: 0.16%

Fund Percent: 0.12%

Fund Percent: 0.27%

Fund Percent: 0.19%

Fund Percent: 0.25%

Fund Percent: 0.16%

Who are the Institutional Investors in the Senior Secured Loan Market?3

They include:

  • Institutional Asset Managers
    • CLOs
    • Loan Mutual Funds
    • Separately Managed Accounts and Comingled Funds
  • Banks
  • Insurance/Finance Companies
  • Hedge Funds
  • Pension Funds and Endowments
  • Sovereign and Private Wealth Funds
  • Family Offices
CLOs Have Delivered Historical Double-Digit Yields in Favor of the Investor

Due to active management, structural risk-mitigation features and on-going requirements,4 CLOs have historically generated favorable distribution yields, even during periods of market disruption.

CLO Equity Average Annual Distribution Yields5

25% 20% 15% 10% 5% 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 YTD 2024 11.7% 14.6% 13.4% 14.8% 17.6% 20.3% 2.1% 11.8% 17.3% 17.1% 14.7% 20.6% 21.0% 18.6% 13.3% 11.2% 12.7% 15.3% 15.1% 7.9% 14.1% Average14.8% 13.9%

1 Sources: finance.yahoo.com, FRED.stlouisfed.org. T-Bills: 3-month Treasury Bills; Treasuries: 10-year US Treasury Bond; Investment Grade Bonds: ICE BofA AAA US Corporate Bond Index; High Yield Bonds: ICE BofA BB US High Yield Corporate Bond Index; Emerging Market Debt: ICE BofA Emerging Markets Corporate Plus.

2  Listed above are a sample of companies that have senior secured loans held by the Fund’s CLOs. “Fund percent” represents the Fund’s percentage amount of loans held by the Fund’s CLOs, aggregated across all CLO holdings. Represents Fund CLO holdings as of June 30, 2024, with underlying senior secured loan holding reports as of May 31, 2024. These account for only a few of the more than 1,850 unique loan issuers in the Fund. Source: Bloomberg, June 2024

3 Morgan Stanley and Citi Research as of 12.31.2019

4 CLOs must meet exposure and cash flow requirements as monitored by a third-party trustee including, but not limited to, over collateralization test, interest coverage test, minimum weighted average spread test, credit quality requirements and issuer and industry diversification requirements which seek to reduce risk and generate favorable distribution rates for CLO investors.

5 Source: Kanerai, Intex, Markit, Barclays Research, includes CLO 1.0 and 2.0 broadly syndicated loans. Yields do not include return of principal. Data as of April 2024 and estimated yields through June 30, 2024. Does not represent total return experienced by investor. Past Performance is not necessarily indicative of future results.

Yield: The amount of income an investment generates. Often expressed as a percentage, yield is calculated by dividing income by market value or purchase price. It is not possible to invest in an index. You cannot invest directly in an index and unmanaged indices do not reflect fees, expenses or sale charges.

CLO Equity (or CLO equity tranche): The tranche within a CLO that is paid any excess spread. The equity tranche payment is prioritized after all the debt and subordinated tranches.