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Weekly Market Summary
Oct 20 to Oct 24, 2025
Extra Credit*
- Annual reports assign each asset a fund owns into one of three buckets based on fair value accounting standards: level 1, which includes US Treasury bills or equities; level 2, which don’t trade on an exchange but are actively traded (most public fixed income falls here); and level 3, which are not actively traded, so asset managers calculate their fair values using the best information available. Level 3 calculations and their inputs can vary widely.
- Gauging level 3 asset totals from annual reports is the easiest way to identify a fund’s liquidity risk. That’s relevant today, given asset managers’ rush to sell private assets to investors on the promise of higher returns. Unfortunately, private assets are less transparent, making it harder for investors to know what they own.
- As these private assets enter more and more regulated investment funds (such as exchange-traded funds, mutual funds, and interval funds), asset managers must comply with the expected disclosures, which include a level 3 fair value assessment. Given how infrequently private assets are valued, and the difficulty in doing so, most should fall into the level 3 bucket. Liquidity risk isn’t a bug of private markets, it’s a feature, with investors rightly expecting to earn a higher return in exchange for that illiquidity.
As of 10/22/25.
Previous reports
*Source: Morningstar®, Bloomberg, Credit Suisse. OAS is Options Adjusted Spread. 4-year discount margin is used for spread for bank loans. Yield quoted is yield-to-worst or equivalent calculation. YTD Low / High for yields are based on end of week and not intraday movements. Indexes and sub-indexes: Investment-grade corporates represented by Bloomberg US Corporate Bond Index. High-yield bonds represented by Bloomberg US Corporate High Yield Index. Bank loans represented by Credit Suisse Leverage Loan Index. The red and green arrows depicted under Yields, Option Adjusted Spreads, and Prices indicate a higher or lower value from the previous week.
Past performance does not guarantee future results. Index performance is not indicative of fund performance. Indexes are unmanaged and it is not possible to invest directly in an index.
Any discussion of individual companies is not intended as recommendation to buy, hold or sell securities issued by those companies. Aristotle Fund holdings can be found on the fund pages linked above.
Investors should consider a fund’s investment goal, risks, charges, and expenses carefully before investing. The prospectus and/or the applicable summary prospectus contain this and other information about the Fund and are available from AristotleFunds.com. The prospectus and/or summary prospectus should be read carefully before investing.
Investing involves risk. Principal loss is possible.
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