Dom Nolan, CEO, Aristotle Pacific Capital, joined Zoe Hunt, Host of RIA Channel, to discuss the importance of active management and a strategic approach to fixed income.
Drawing on Aristotle Pacific Capital’s focus on liquid credit, Nolan highlights the potential benefits of active management in fixed income. He explains that fixed income indexes can be difficult to replicate, particularly within leveraged finance. Active managers, however, can offer greater flexibility in trading, management, sourcing, and sizing, as well as the potential to add long-term value.
Nolan also discusses signs of private credit fatigue following substantial inflows over the past five to seven years. As private credit has moved into more liquid vehicles, he notes that periods of market turbulence can create a misalignment between investor demand for liquidity and the underlying illiquid assets. Against this backdrop, he is seeing more conversations about complementing private credit with liquid credit.
Looking across the fixed income landscape, Nolan views floating-rate loans, or bank loans, as underappreciated. He notes that the asset class has outperformed the Agg by nearly 500 basis points over the past five years, despite continued outflows, and has experienced lower volatility than most interest rate vehicles. Nolan encourages advisors to consider bank loans as a strategic rather than tactical allocation.
Resources: