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.

Addressing Challenges in the Current Market

Yields on traditional income investments have been declining for over a decade. This requires individual investors to adapt their income strategy to today’s low yield environment through alternative sources.

Select Historical Index Yields1
(Current Yields as of 6.30.2022)

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.

1,200+ Diversified Companies2

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

They include:

  • Institutional Asset Managers
  • Banks
  • Insurance/Finance Companies
  • Hedge Funds
  • Pension Funds and Endowments
  • Sovereign and Private Wealth Funds
  • Family Offices
CLOs Have Delivered Attractive Yields Across Multiple Economic Cycles

Active management and structural safeguards have allowed CLOs to generate favorable distribution rates, even during periods of market disruption.

CLO Equity Annual Distribution Yields4

1 Index yields reflect the annualized average yield over the trailing 10-year period, as of 6.30.2022. 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. CLO Equity: Kanerai, Intex, Markit, Barclays Research, includes CLO 1.0 and 2.0 broadly syndicated loans. Yields do not include return of principal, as of 6.30.2022. 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. 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. Does not represent total return experienced by investor. Past Performance is not a guaranty of future performance.

Listed above are some of the companies, and the respective percentage of the Fund’s underlying holdings, that have loans in CLOs that are included in the underlying holdings of the Fund. These companies account for only a few of the approximate 676 unique issuers included in the Fund as of May 31, 2022.Source: Citi Research as of 3.31.2019 and Dell 10-Q as of 3.31.2021.

3 Morgan Stanley and Citi Research as of 12.31.2019

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. Source: Kanerai, Intex, Markit, Barclays Research, includes CLO 1.0 and 2.0 broadly syndicated loans. Yields do not include return of principal. Data thru August 2022. Does not represent total return experienced by investor. Past Performance is not a guaranty of future performance.