Fund Strategy and Portfolio Placement

The Fund seeks to generate high current income while secondarily seeking attractive, long-term risk-adjusted returns with low correlation to the broader markets.

Targeted Distribution Rate: 8.0%*
Annual Yield; Paid Quarterly

Portfolio Placement
•  Income Generation
•  Portfolio Diversifier

Distinguishing Characteristics

Income-focused portfolio allocation by investing, directly or indirectly, in senior secured loans and entities that own a diversified pool of senior secured loans known as Collateralized Loan Obligations (“CLOs”).

The Fund aims to provide investors with:

  • Potential for 8% annual yield in an interval fund format, distributed quarterly
  • Exposure to loans with highest payment priority and secured by corporate assets
  • Significantly reduced exposure to rising interest rate risk
  • Diversification potential to broader markets
  • Mandated structural protections for investors
Attractive Features of Senior Secured Loans

Multiple market cycle-tested, resilient asset class with low historical impairment rates

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Senior

Single highest and most senior position in a company’s capital structure

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Secured

First lien security interest in a company’s assets, including cash, receivables, inventory, property, plant and equipment (PP&E) and all other assets

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Floating Rate

Helps mitigates against rising interest rate risk associated with fixed rate bonds

Potential Benefits of Accessing Senior Secured Loans through CLOs

Managers can gain exposure to Senior Secured Loans through the strategic investment in CLOs. CLOs are actively managed vehicles where the structure provides opportunities to accretively reinvest cash flows and benefit from volatility in the loan market.

Attractive Yield

CLO Equity has delivered approximately 15% average annualized distributions over the last two decades1

Diversified Loan Pool

Actively managed, diversified pools of senior secured loans issued to large, mature companies across multiple industries

Performance Thru
Economic Cycle

Active investment management with non-recourse debt financing contributes to attractive performance across the economic cycle

Lower Interest Rate Risk

Floating interest rates on underlying loans, coupled with minimum interest rate floors, may help diminish negative impact of rising interest rates

Attractive Structure

Low cost, long-term, non-recourse financing, with no forced sales

The CLO Structure

The CLO structure has multiple on-going, built-in safeguards, self-correction mechanisms, and required collateral quality tests intended to optimize risk-adjusted returns.2

Senior Secured Loans are the Building Blocks of CLOs

CLOs are a diversified pool of 150-200 senior secured loans, comprehensively underwritten and constructed by leading institutional investment managers with robust credit expertise.

Credit ratings are provided by third party credit agencies, including S&P, Fitch and Moody’s, and indicate forward looking opinions about an issuer’s relative creditworthiness.  A typical rating scale may include AAA, AA, A, BBB, BB, with below BBB- (or Baa3) typically denoting below investment grade.

L = London Interbank Offered Rate (LIBOR); a benchmark interest rate at which major global banks lend to one another.

1 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. Represents period from 2003-2021 with average annualized yields of 14.8%, as of 6.30.2021. Does not represent total return experienced by investor. Past performance is not a guaranty of future performance.

2 CLOs are subject to mandatory on-going required testing including, but not limited to, collateral concentration limitations, interest coverage tests to ensure cash flows exceed debt tranche payments by predetermined amounts, diversification requirements on issuers, industry, and credit, and collateral quality tests which requires principal value of a CLO’s underlying loan pool to exceed the value of CLO debt, that together, are intended to place additional mechanisms and restrictions on how CLOs are managed.

* The Fund’s distribution policy is to make quarterly distributions to shareholders. The level of quarterly distributions (including any return of capital) is not fixed, but is expected to represent an annual rate of approximately 8.0% of the Fund’s current net asset value per share. Such distributions are accrued daily and paid quarterly and this distribution policy is subject to change. Shareholders receiving periodic payments from the Fund may be under the impression that they are receiving net profits. However, all or a portion of a distribution may consist of a return of capital. Shareholders should not assume that the source of a distribution from the Fund is net profit. A return of capital is not taxable to a shareholder unless it exceeds a shareholder’s tax basis in the shares. Returns of capital reduce a shareholder’s tax cost (or “tax basis”). Once a shareholder’s tax basis is reduced to zero, any further return of capital would be taxable. Shareholders should note that return of capital will reduce the tax basis of their shares and potentially increase the taxable gain, if any, upon disposition of their shares.

** The Fund is a closed-end interval fund, the shares have no history of public trading, nor is it intended that the shares will be listed on a public exchange at this time. No secondary market is expected to develop for the Fund’s shares. Limited liquidity is provided to shareholders only through the Fund’s quarterly repurchase offers for no less than 5% of the Fund’s shares outstanding at net asset value and there is no guarantee that an investor will be able to sell all the shares that the investor desires to sell in the repurchase offer. The Fund is suitable only for investors who can bear the risks associated with the limited liquidity of the Fund and should be viewed as a long-term investment.