Investing Ideas

Leveraged loans: looking beyond TIPS for inflation protection

Floating-rate coupons, minimal duration exposure, and historically low default rates have helped leveraged loans preserve purchasing power through a variety of inflationary environments.

By: Brian Donnelly Jonathan Cain David Hays

Updated: 8/31/2026

Key Takeaways

Leveraged loans have been the most consistent inflation-fighting asset since 1992, based on the percentage of the time their 12-month rolling returns have exceeded CPI inflation.
The combination of very low duration and floating-rate coupons may offer more complete protection against rising inflation than other asset classes.
Leveraged loans have produced a positive calendar-year return in 27 of the past 29 years.
Loan defaults are a risk for this asset class, although the default rate for leveraged loans has remained historically low in recent years.

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Leveraged loans: Looking beyond TIPS for inflation protection

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