The Case for Bank Loans

Join Pacific Funds Fixed Income portfolio managers JP Leasure, Michael Marzouk, and senior director of business development Michael Spitler as they discuss the case for bank loans.


Describe the investment approach to managing Pacific Funds Floating Rate Income.

JP Leasure: "Our bank loan Strategy seeks to outperform its benchmark through a selective and nimble approach. The portfolio managers of our fund have worked together for nearly a decade. We construct a portfolio of around 100 companies and invest in bank loans issued by companies where we have a strong degree of understanding of their business, fundamentals, and downside risk."

What makes your approach to managing a bank loan fund different from other managers?

Michael Spitler: "Three factors differentiate our approach to bank loans: our large company focus, selectivity, and downside risk emphasis. First, we are a large-cap bank loan manager. We focus on larger companies as we believe their attributes provide downside risk protection and a margin of safety relative to smaller and less liquid companies. Second, we are selective, believing security selection helps drive returns. Because of this selective approach, a distinction in our investment philosophy is our ability and willingness to not hold many companies we do not believe present relative value. Third, we emphasize a goal of capital protection. We actively seek to avoid defaults through an underwriting process focused on understandable and transparent companies."

Describe your positioning in Pacific Funds Floating Rate Income.

Michael Marzouk: "Pacific Funds Floating Rate Income is focused on several investment themes. We emphasize mostly U.S.-centric companies with strong balance sheets we feel are well positioned for the current environment. We are also focused on the performing segment of the bank loan market with limited exposure to distressed issuers, which we would define as loans with a dollar price of below ninety."

Closing Comments

JP Leasure: "In summary, we believe we may see a favorable performance outlook for bank loans given growing relative value, limited duration risk, and a technical backdrop providing relative insulation from market volatility."

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