Weekly Market Summary

Extra Credit^*

• Leveraged loan fund assets under management rose by $1.3 billion in May, extending April’s rebound after eight consecutive months of declines, according to Morningstar data. ETFs drove most of the increase, adding $1 billion, while mutual funds contributed roughly $300 million. Closed-end fund assets declined slightly.
• Asset flows have steadied after a rocky first quarter, with the $9.5 billion February–March drawdown looking moderate compared with prior stress episodes in April 2025, September 2022, and March 2020. But the larger story remains a slow leak: leveraged loan fund AUM fell 10.6% in 2025 and is down another 7.3% through May 2026, indicating that recent gains have stabilized the market without reversing the broader decline.
• Loan funds have become a much smaller part of the leveraged loan investor base over time. Their share of the Morningstar LSTA US Leveraged Loan Index has fallen to 6.5%, down from a peak of 23.8% in February 2014. Within the loan fund universe, ETFs have steadily gained share since March 2011. ETFs now account for 21% of loan fund AUM, while mutual funds still represent the majority at 68%, down from 87% in March 2011. Closed-end funds make up the remaining 11%.

Source: Pitchbook as of 7/8/2026. A closed-end fund sells a set number of shares once through an initial public offering (IPO) to raise investment capital. These shares are then traded on a stock exchange, with no new shares being issued or new money added to the fund. The LSTA U.S. Leveraged Loan Index is a primary benchmark that measures the market-weighted performance of the U.S. institutional leveraged loan market. Managed in collaboration with the Loan Syndications and Trading Association (LSTA), it tracks the performance of corporate debt issued to companies with high debt loads or lower credit ratings.