Oaktree Strategic Credit Fund

Verdict

• ALIGNMENT: Below Average

  • The fund does not charge a performance fee, which removes pressure for short-term gains but could also reduce incentives for managers to outperform. Limited transparency around the portfolio managers’ personal investment makes it unclear whether their financial interests are meaningfully tied to investor outcomes.
  • Without clear “skin in the game,” HENRY investors may question how aligned management truly is with shareholder goals. The lack of meaningful ownership participation reduces confidence in long-term commitment from fund stewards.

• Performance: Average

  • The fund’s 8.72% annualized return since inception is healthy for a credit-focused strategy, especially when coupled with consistent monthly income and a strong current yield of 9.46%. These metrics appeal to income-focused investors seeking stability.
  • Zero defaults since inception reflect strong credit underwriting and risk controls. However, while dependable, the fund’s performance is not exceptional, especially when compared to equity-driven alternatives offering higher long-term growth potential.

• Market Risk: Average

  • The portfolio is diversified across 108 issuers and 35 different industries, helping to reduce exposure to individual borrowers or sectors. This wide diversification limits downside during industry-specific shocks.
  • With 95% of the holdings in senior secured loans and 89% floating-rate exposure, the fund is well-positioned to handle interest rate changes while maintaining resilience in a credit downturn.

• Business Risk: Below Average

  • Oaktree’s extensive 30+ year track record and $126 billion managed in credit strategies provides operational strength and a powerful network for sourcing attractive deals. Institutional infrastructure benefits smaller investors indirectly.
  • The fund maintains conservative leverage (0.32x) and targets large, financially stable borrowers with a median EBITDA of $176 million, which reduces business execution risk and borrower fragility. HENRY investors gain institutional-quality exposure in a stable structure.

• Debt Risk: Average

  • The fund applies low leverage at the fund level, and its portfolio companies maintain an average loan-to-value ratio of just 38%, providing a cushion if market values decline or if defaults rise modestly.
  • Most loans are floating-rate and senior secured, which adds protection in rising rate environments. Still, no fund holding corporate debt is free from credit-cycle risk, especially if a broad downturn affects high-yield borrowers.

• Liquidity Risk: Above Average

  • Redemptions are limited to 5% of fund shares per quarter, which can significantly restrict access to cash during periods of market stress or when many investors exit simultaneously.
  • A minimum one-year holding period and potential for redemption suspensions further reduce liquidity flexibility. HENRY investors should avoid this fund for emergency needs or near-term financial goals, as liquidity is not guaranteed regardless of market conditions.

• Transparency: Above Average

  • The fund provides monthly NAV updates, in-depth quarterly reports, and detailed data on holdings, sectors, and geographic exposure. This level of disclosure offers clarity rarely seen in private credit strategies.
  • Third-party asset valuations and regular communication with investors support sound decision-making. HENRY investors seeking visibility and oversight in their investments will appreciate Oaktree’s commitment to transparency and high-quality reporting.

• Disclaimer

  All Rights Reserved. The data and analyses contained herein are the property of Noyack and are protected by copyright and other intellectual property laws. The information provided is intended solely for informational purposes and should not be construed as investment advice. It is not an offer to buy or sell a security, and it is not intended to be used as the sole basis for any investment decision. The information contained in this document is believed to be accurate and reliable based on sources believed to be reliable, but Noyack makes no representation or warranty, express or implied, as to its completeness, accuracy, or timeliness. The data and analyses are subject to change without notice and Noyack is not obligated to update this information. The use of the information contained in this document is at the sole risk of the reader, and Noyack shall not be responsible for any losses, damages, or expenses incurred by any person as a result of reliance on the information contained herein. Noyack does not endorse or approve any investment or trading strategy and does not guarantee any specific outcome or profit. The reader should always conduct their own independent analysis and consult with a qualified financial advisor before making any investment decisions. This document may contain forward-looking statements and projections which are subject to risks and uncertainties, and actual results may differ materially. Past performance is not indicative of future results. This document is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Noyack reserves the right to modify or discontinue the provision of the information contained in this document, in whole or in part, at any time and without notice. The information contained in this document is provided “as is” and Noyack makes no representation or warranty of any kind, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of the information contained in this document. Noyack shall not be liable for any errors or omissions contained in this document or for any damages whatsoever arising out of or in connection with the use of this document.