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4 minutes to read by  T.Mowl, L.Best, BlueBay Fixed Income Team Mar 11, 2026

Key takeaways

  • The large, USD4 trillion dollar-plus securitized credit landscape offers a variety of solutions for investors seeking alternatives to traditional carry with structural safeguards.

  • These solutions can range from liquid cash solutions to investment grade securitized credit to illiquid alternatives.

  • In a market environment with spreads on the tighter end, periods of volatility and rising single name stress, strategies that are diversified, active and offer potential attractive income are resonating with investors.

Low correlation to other risk assets

We are seeing increasing interest from investors looking for alternative asset classes that offer lower correlation to more traditional fixed income and equities exposure. Securitized credit provides exposure to alternative sources of risk, such as consumer risk, alongside having low interest rate duration which makes it a good complement to traditional assets. In our view, investors are seeking predictable and alternative sources of carry with structural safeguards from defaults.

Accessing alternative sources of risk

In the liquid high grade space – investing only in the most senior parts of the capital structure, primarily focusing on AAA-rated bonds with a range of collateral types – strategies can play a key role as cash enhancement vehicles offering the potential for an attractive spread pick-up, very high credit quality, and low drawdowns.

Securitized credit can offer a compelling solution from a liquidity perspective, given the attractive spread pick-up even in the very liquid, high quality part of the capital structure.

Secondly, investment grade securitized can provide an attractive complement to traditional investment grade corporates, with diversified strategies potentially offering shorter spread duration, floating rate exposure, an attractive spread pick-up, and safeguards from single name stress alongside high credit quality.

Accessing the illiquidity premium

At the illiquid end of the spectrum, strategies investing in capital call loans are gaining traction as a diversifier to corporate risk factors. Here exposure to more highly rated sponsors can provide quality risk with an attractive spread pick-up versus IG assets driven by the illiquidity premium. As a large market that has traditionally been accessible only by banks, the increase in strategies offering this is very compelling for institutional investors as an alternative source of potential income in very high quality assets that are not linked to broader credit and equity markets.

Some investors are willing to have lower liquidity allocations and, in some cases, lock up capital, but the demand for an appropriate spread pick-up has increased. In areas like direct lending for example, we have seen a trend of spread compression versus the public broadly syndicated loan market, which suggests the illiquidity premium is not as compelling.

There is demand for high quality assets that offer a spread pick-up and some investors are willing to move into illiquid assets to access the premium. This is where capital call loan strategies can provide compelling solutions.

Beneficial in all market environments

In our experience, investors are looking for asset classes that can complement their existing asset allocations, offer lower correlations, and provide an alternative source of income.

Uncertainty is likely to remain high this year, however our outlook for securitized credit for 2026 is positive. Ultimately the asset class will be driven by broader macro moves, but its compelling characteristics such as short spread duration, strong collateral and structures, safeguards from single name credit events and natural de-leveraging offer compelling benefits versus traditional credit.

Securitized credit at RBC Global Asset Management

Securitized credit is an important asset class for RBC. Our investment team is embedded within the wider global fixed income platform and benefits from the experience of various teams including leveraged finance, investment grade, macro specialists and emerging markets.

We have longstanding experience across the securitized credit market, and in a supply-driven market, where the ability to source investments is a key alpha driver, longstanding dealing relationships are key, in our opinion.

Disclosure
This material is provided by RBC Global Asset Management (RBC GAM) for informational purposes only and may not be reproduced, distributed or published without the written consent of RBC GAM or its affiliated entities listed herein. This material does not constitute an offer or a solicitation to buy or to sell any security, product or service in any jurisdiction; nor is it intended to provide investment, financial, legal, accounting, tax, or other advice and such information should not be relied or acted upon for providing such advice. This material is not available for distribution to investors in jurisdictions where such distribution would be prohibited.

RBC GAM is the asset management division of Royal Bank of Canada (RBC) which includes RBC Global Asset Management Inc. (RBC GAM Inc.), RBC Global Asset Management (U.S.) Inc. (RBC GAM-US), RBC Global Asset Management (UK) Limited (RBC GAM-UK), and RBC Global Asset Management (Asia) Limited (RBC GAM-Asia), which are separate, but affiliated subsidiaries of RBC.

In Canada, this material is provided by RBC GAM Inc. (including PH&N Institutional), each of which is regulated by each provincial and territorial securities commission with which it is registered. In the United States, this material is provided by RBC GAM-US, a federally registered investment adviser. In Europe this material is provided by RBC GAM-UK, which is authorised and regulated by the UK Financial Conduct Authority. In Asia, this material is provided by RBC GAM-Asia, which is registered with the Securities and Futures Commission (SFC) in Hong Kong.

Additional information about RBC GAM may be found at www.rbcgam.com.

This material has not been reviewed by, and is not registered with any securities or other regulatory authority, and may, where appropriate and permissible, be distributed by the above-listed entities in their respective jurisdictions.

Any investment and economic outlook information contained in this material has been compiled by RBC GAM from various sources. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by RBC GAM, its affiliates or any other person as to its accuracy, completeness or correctness. RBC GAM and its affiliates assume no responsibility for any errors or omissions in such information.

Opinions contained herein reflect the judgment and thought leadership of RBC GAM and are subject to change at any time. Such opinions are for informational purposes only and are not intended to be investment or financial advice and should not be relied or acted upon for providing such advice. RBC GAM does not undertake any obligation or responsibility to update such opinions.

RBC GAM reserves the right at any time and without notice to change, amend or cease publication of this information.

Past performance is not indicative of future results. With all investments there is a risk of loss of all or a portion of the amount invested. Where return estimates are shown, these are provided for illustrative purposes only and should not be construed as a prediction of returns; actual returns may be higher or lower than those shown and may vary substantially, especially over shorter time periods. It is not possible to invest directly in an index.

Some of the statements contained in this material may be considered forward-looking statements which provide current expectations or forecasts of future results or events. Forward-looking statements are not guarantees of future performance or events and involve risks and uncertainties. Do not place undue reliance on these statements because actual results or events may differ materially from those described in such forward-looking statements as a result of various factors. Before making any investment decisions, we encourage you to consider all relevant factors carefully.

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© RBC Global Asset Management Inc., 2026
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