Jon: 
The reason that we engaged with First Eagle is that we felt Napier Park had gotten to a point in our company lifecycle when we needed to start investing in our client-facing infrastructure—including product development and management, client outreach and investor relations—if we wanted to execute our long-term business strategy. As we continue to move forward and markets become more interesting, we will need to expand from a market perspective as well. The transaction gave us the bandwidth to make investments over the next few years and to concentrate on how to best grow the business in a way that also enhances the solutions First Eagle offers to clients.

Jim: 
The transaction also has been very positively received by our client base. There has been a lot of consolidation in the alternative credit space, and the fact that we participated in that consolidation did not come as a big surprise to most clients—they understood our need to invest in client infrastructure and expand our market breadth. Generally speaking, clients have appreciated our thoughtful approach to unlocking access to resources by partnering with a company like First Eagle. I’m sure that being part of a larger platform, with access to a bigger balance sheet and the stability all of that implies, was a source of comfort to some clients in the challenging environment of 2022.

Q: Speaking of challenging environments, what was your experience in the credit markets in 2022?

Jim: 
We came into 2022 expecting higher volatility and greater dispersion in the credit markets as fundamentals and technicals became more idiosyncratic. While we were right about direction, we underestimated the magnitude of the correction that lay ahead. Though the credit market was broadly lower during the year, higher-quality, shorter-duration assets delivered relative outperformance in the rising-rate environment.¹

We invest in a broad range of floating-rate assets, which carry less interest rate risk than fixed-rate assets. They do have spread-duration risk, however, and 2022’s meaningful rate moves drove much of the repricing across global credit markets. Liquidity has been another challenge, as the violent and quick move in rates during the year has resulted in significant bid/offer widening.

A bright spot in the shift to higher base rates and wider credit spreads is that it allows managers to construct portfolios with the potential for much higher yields than were available a year ago without taking on additional credit risk. Yield as a meaningful contributor to total return is a benefit we haven’t had in a very long time, and it has the potential to initiate an asset allocation cycle across our markets and products.

Q: Tell us about the Real Assets strategy. Are you seeing demand in the current environment?

Jon: 
Given inflation pressures and the continued search for sources of uncorrelated yield, the number of conversations we had about the Real Asset platform escalated meaningfully in 2022. These assets tend to be long-lived, income generative, essential-use equipment with a focus on preserving residual value. Our platform provides diversified exposure to hard-to access operational and developmental assets across three primary areas: railcars, aircraft and renewable energy. Meanwhile, the operators of these assets, who continue to provide the intensive day-to-day servicing, receive long-dated, non-dilutive, partnering capital to support their core businesses.

In contrast with many financial assets, hard assets historically have been more resilient during difficult macroeconomic periods, a trend that persisted amid the challenges of 2022. There are numerous reasons real assets continue to appear attractive in today’s economic and market environments. Based on equipment value and its potential to generate future income through operational usage, the price of real assets historically has been uncorrelated to financial markets and resilient to short-term volatility while also demonstrating a positive sensitivity to rising interest and inflation rates. Further, the negotiated nature of these investments allows us to structure agreements specifically with capital preservation in mind. Finally, our recent focus on renewable energy assets may help support decarbonization and sustainability efforts.

Q: You both have a long history of investing in alternative credit. What have previous bouts of market volatility taught you?

Jim:
As we refined our investment process over time, we’ve learned that periods of market volatility and uncertainty historically have been supportive of active management, and the dispersion among assets that often results allows our highly experienced credit research team to shine.

We’ve found that in our areas of investment, active management tends to be the exception rather than the rule; most managers tend to focus on upfront portfolio construction, and then it’s “set it and forget it” unless credit issues arise or liquidity is needed. At Napier Park, we tend to be very active. We continually look to optimize our exposures, moving risk profiles around in an effort to take advantage of opportunities as they emerge, facilitated by our institutional-grade infrastructure, creativity and decades of specialized expertise among our investment professionals. While Jon and I each have nearly 40 years behind us, you’ll find very seasoned professionals across the organization; our senior management team averages 33 years of experience in the industry and 16 years working together. 

Jon:
While our flagship Opportunistic Credit strategy is intended to be an evergreen, all-weather portfolio over credit cycles, we also maintain a Credit Dislocation strategy that seeks to maximize absolute returns by taking advantage of periods of credit dislocation. The strategy operates on a contingent capital basis; that is, committed capital is deployed only when we believe the opportunity exists to build a portfolio that has the potential to generate our target return. When such circumstances emerge, we can act as a liquidity provider to stressed sellers.

For the Credit Dislocation strategy, we target non-investment grade performing assets; we’re buying mezzanine tranches and equity/first-loss tranches in things like collateralized loan obligations, asset-backed securities, mortgage-backed securities, privately arranged consumer and mortgage loans, commercial receivables and leasing. These tranches typically are the lowest rated within the securitization or are unrated,and offer the highest expected yield.

In our view, a performing asset that has lost value in a challenging market—if of good quality—is well positioned to continue generating positive cash flow for its owner even if its price remains depressed. The eventual return of market liquidity should act as a catalyst for price improvement in such credits while also driving spreads broadly tighter, encouraging new issuance and promoting the resumption of optimal market functionality.

Jim:
The onset of Covid-19 is a good example of such a scenario. Asset prices fell sharply in March 2020 as the pandemic took hold, providing ample opportunities to acquire assets at steep discounts. Once the Fed stepped in, market conditions normalized and the prices of many once-troubled assets began to do the same. In these types of recoveries, it’s been our experience that higher-quality, shorter-duration assets often are the first to rebound while others lag; a nimble manager potentially can add value by taking profits from early-to-recover assets and directing the proceeds toward those yet to pick up a bid.

Q: What are you expecting for alternative credit markets in 2023?

Jim:
We believe we are headed into a weaker corporate earnings environment in 2023, likely to be marked by idiosyncratic risk-related events rather than a broad increase in defaults across companies and markets. Both corporations and consumers alike did an impressive job of managing their balance sheets and terming out liabilities, as evinced by the record-setting levels of refinancing activity in late 2020 and 2021. This should help mitigate the impacts of a slowdown in economic activity. We anticipate the first-order effects of economic slack will be seen in rating downgrades and then eventually through a higher but historically modest level of defaults, centered on corporates with weaker capital structures and operating in more cyclical industries. The continued strength of the US dollar may cause additional stress to corporations that generate meaningful revenue streams outside the US, which is not uncommon among investment grade issuers.

Jon:
The level of uncertainty is somewhat unsettling. There’s too much exogenous risk, both geopolitical and economic. We have the war in Ukraine and signs of unrest among the Chinese population. Europe is potentially facing a tough winter that may push them closer to recession as financial conditions tighten, and the UK appears even further along that path. Questions still linger about the stability of global supply chains. The risk of policy error is quite high, in our view, given the extraordinary circumstances in which central bankers and politicians are operating.

All of these factors are causing us to maintain a more reserved investing posture right now. That said, while I have no definitive prediction for our markets over the next six months, I’m comfortable investing with a two-year view in good credits at current price and yield levels. This is not to say the situation won’t get worse before it gets better—we may find ourselves investing more capital six or nine months from now, at even cheaper prices. But it all comes down to the quality of our credit work.

1. Source: FactSet, data as of November 30, 2022.

The opinions expressed are not necessarily those of the firm and are subject to change based on market and other conditions. These materials are provided for informational purposes only. These opinions are not intended to be a forecast of future events, a guarantee of future results, or investment advice. Any statistics contained herein have been obtained from sources believed to be reliable, but the accuracy of this information cannot be guaranteed. The views expressed herein may change at any time subsequent to the date of issue hereof. The information provided is not to be construed as a recommendation or an offer to buy or sell or the solicitation of an offer to buy or sell any security. Past performance does not guarantee future results.

Risk Disclosures

All investments involve the risk of loss of principal.

The value and liquidity of portfolio holdings may fluctuate in response to events specific to the companies or markets, as well as economic, political or social events in the United States or abroad. During periods of market volatility, the value of individual securities and other investments at times may decline significantly and rapidly. The securities of small companies can be more volatile in price than those of larger companies and may be more difficult or expensive to trade.

A principal risk of investing in value stocks is that the price of the security may not approach its anticipated value or may decline in value. “Value” investments, as a category, or entire industries or sectors associated with such investments, may lose favor with investors as compared to those that are more “growth” oriented.

There are risks associated with investing in foreign investments (including depositary receipts). Foreign investments, which can be denominated in foreign currencies, are susceptible to less politically, economically and socially stable environments; fluctuations in the value of foreign currency and exchange rates; and adverse changes to government regulations.

Investment in gold and gold-related investments present certain risks, including political and economic risks affecting the price of gold and other precious metals, like changes in US or foreign tax, currency or mining laws, increased environmental costs, international monetary and political policies, economic conditions within an individual country, trade imbalances, and trade or currency restrictions between countries. The price of gold, in turn, is likely to affect the market prices of securities of companies mining or processing gold and, accordingly, the value of investments in such securities may also be affected. Gold-related investments as a group have not performed as well as the stock market in general during periods when the US dollar is strong, inflation is low and general economic conditions are stable. In addition, returns on gold-related investments have traditionally been more volatile than investments in broader equity or debt markets. Investment in gold and gold-related investments may be speculative and may be subject to greater price volatility than investments in other assets and types of companies.

Strategies whose investments are concentrated in a specific industry or sector may be subject to a higher degree of risk than funds whose investments are diversified and may not be suitable for all investors.

Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Portfolio holdings are subject to change and should not be considered a recommendation to buy, hold or sell securities. Current and future portfolio holdings are subject to risk.

Alternative investments can be speculative and are not suitable for all investors. Investing in alternative investments is only intended for experienced and sophisticated investors who are willing and able to bear the high economic risks associated with such an investment. Investors should carefully review and consider potential risks before investing. Certain of these risks include:

• Loss of all or a substantial portion of the investment;

• Lack of liquidity in that there may be no secondary market or interest in the strategy and none is expected to develop;

• Volatility of returns;

• Interest rate risk;

• Restrictions on transferring interests in a private investment strategy;

• Potential lack of diversification and resulting higher risk due to concentration within one of more sectors, industries, countries or regions;

• Absence of information regarding valuations and pricing;

• Complex tax structures and delays in tax reporting;

• Less regulation and higher fees than mutual funds;

• Use of leverage, which magnifies the potential for gain or loss on amounts invested and is generally considered a speculative investment technique and increases the risks associated with investing in the strategy;

• Carried interest, which may cause the strategy to make more speculative, higher-risk investments than would be the case in absence of such arrangements; and

• Below-investment grade loans, which may default and adversely affect returns.

Active management is an investment management approach in which an investor, a professional money manager or a team of professionals tracks the performance of an investment portfolio and makes buy, hold, and sell decisions about the assets in it.

Asset-backed securities (ABS) are financial instruments collateralized by a pool of assets, such as mortgages, credit-card receivables, auto loans and student loans.

Bear market is generally defined as a period during which a market experiences a prolonged decline in price.

Bottom-up investing primarily considers factors affecting individual companies and secondarily focuses on industries and economic trends.

Bull market is generally defined as a period during which a market experiences a prolonged increase in price.

Collateralized loan obligations (CLOs) are financial instruments collateralized by a pool of corporate loans.

Consumer price index (CPI) is a measure of the average change over time in prices paid by consumers for a specific basket of goods and services. The core version of this index excludes more volatile food and energy prices.

Consumer price index (CPI) is a measure of the average change over time in prices paid by consumers for a specific basket of goods and services. The core version of this index excludes more volatile food and energy prices.

Diversification is a strategy that involves allocating assets to a variety of investments with the intention to help manage risk.

Federal funds rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight on an uncollateralized basis.

Floating-rate securities are financial instruments whose interest rate is adjusted periodically based on movements in an underlying reference rate.

Intrinsic value is based on a judgment of what a prudent and rational business buyer would pay in cash for all of a company in normal markets.

Margin of safety is defined by First Eagle as the difference between a company’s market value and our estimate of its intrinsic value. An investment made with a margin of safety is no guarantee against loss.

Mortgage-backed securities (MBS) are financial instruments collateralized by a pool of mortgages.

Passive Management is an investment management approach that seeks to mirror the performance of a designated index.

Special-purpose acquisition company (SPACs) are publicly listed entities formed solely to acquire one or more privately held companies.

Target-date funds are packaged asset-allocation products whose investment allocation shifts over time as their target date nears.

Treasury inflation-protected securities (TIPS) are a type of US Treasury issuance whose principal value is indexed to the rate of inflation.

Volatility is a statistical measure of the degree to which the return of a portfolio or individual security deviates from its mean over time. Indexes are unmanaged, and one cannot invest directly in an index.

Equity Indexes

MSCI EAFE Index measures the performance of large and midcap securities across 21 developed markets countries around the world excluding the US and Canada.

MSCI EAFE Growth Index measures the performance of large and midcap securities exhibiting overall growth style characteristics across developed markets countries around the world excluding the US and Canada. The growth investment style characteristics for index construction are defined using five variables: long-term forward EPS growth rate, short-term forward EPS growth rate, current internal growth rate, long-term historical EPS growth trend, and long-term historical sales per share growth trend.

MSCI EAFE Value Index measures the performance of large and midcap securities exhibiting overall value style characteristics across developed markets countries around the world excluding the US and Canada. The value investment style characteristics for index construction are defined using three variables: book value to price, 12-month forward earnings to price, and dividend yield.

MSCI EAFE Mid-Cap Index measures the performance of midcap securities across developed markets countries around the world
excluding the US and Canada.

MSCI EAFE Mid-Cap Growth Index measures the performance of midcap securities exhibiting overall growth style characteristics across developed markets countries around the world excluding the US and Canada. The growth investment style characteristics for index construction are defined using five variables: long-term forward EPS growth rate, short-term forward EPS growth rate, current internal growth rate, long-term historical EPS growth trend, and long-term historical sales per share growth trend.

MSCI EAFE Mid-Cap Value Index measures the performance of midcap securities exhibiting overall value style characteristics across developed markets countries around the world excluding the US and Canada. The value investment style characteristics for index construction are defined using three variables: book value to price, 12-month forward earnings to price, and dividend yield.

MSCI Emerging Markets Index measures the performance of large and midcap representation across 21 emerging markets countries around the world.

MSCI EAFE Small Cap Index measures the performance of small cap representation across developed markets countries around the world excluding the US and Canada.

MSCI EAFE Small Cap Growth Index measures the performance of small cap securities exhibiting overall growth style characteristics across developed markets countries around the world excluding the US and Canada. The growth investment style characteristics for index construction are defined using five variables: long-term forward EPS growth rate, short-term forward EPS growth rate, current internal growth rate, long-term historical EPS growth trend, and long-term historical sales per share growth trend.

MSCI EAFE Small Cap Value Index measures the performance of small cap securities exhibiting overall value style characteristics across developed markets countries around the world excluding the US and Canada. The value investment style characteristics for index construction are defined using three variables: book value to price, 12-month forward earnings to price, and dividend yield.

MSCI World Index measures the performance of large and midcap securities across 23 developed markets countries around the world.

MSCI World Growth Index measures the performance of large and midcap securities exhibiting growth style characteristics across 23 developed markets countries. The growth investment style characteristics for index construction are defined using five variables: long-term forward EPS growth rate, short-term forward EPS growth rate, current internal growth rate, long-term historical EPS growth trend, and long-term historical sales per share growth trend.

MSCI World Value Index measures the performance of large and midcap securities exhibiting value style characteristics across 23 developed markets countries. The value investment style characteristics for index construction are defined using three variables: book value to price, 12-month forward earnings to price, and dividend yield.

Russell 1000® Index measures the performance of the large cap segment of the US equity universe. It is a subset of the Russell 3000® Index and includes approximately 1,000 of the largest securities based on a combination of their market cap and current index membership.

Russell 1000® Growth Index measures the performance of the large cap growth segment of the US equity universe. It includes those Russell 1000 companies with relatively higher price-to-book ratios, higher I/B/E/S forecast medium-term (two-year) growth, and higher sales per share historical growth (five years).

Russell 1000® Value Index measures the performance of the large cap value segment of the US equity universe. It includes those Russell 1000 companies with relatively lower price-to-book ratios, lower I/B/E/S forecast medium-term (two-year) growth, and lower sales per share historical growth (five years).

Russell 2000® Index measures the performance of the small cap segment of the US equity universe. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership.

Russell 2000® Growth Index measures the performance of the small cap growth segment of the US equity universe. It includes those Russell 2000 companies with relatively higher price-to-book ratios, higher I/B/E/S forecast medium-term (two-year) growth, and higher sales per share historical growth (five years). 

Russell 2000® Value Index measures the performance of the small cap value segment of the US equity universe. It includes those Russell 2000 companies with relatively lower price-to-book ratios, lower I/B/E/S forecast medium-term (two-year) growth, and lower sales per share historical growth (five years).

Russell Midcap® Index measures the performance of the midcap segment of the US equity universe. It is a subset of the Russell 1000® Index and includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.

Russell Midcap® Growth Index measures the performance of the midcap growth segment of the US equity universe. It includes those Russell Midcap Index companies with relatively higher price-to-book ratios, higher I/B/E/S forecast medium-term (two-year) growth, and higher sales per share historical growth (five years).

Russell Midcap® Value Index measures the performance of the midcap segment of the US equity universe. It includes those Russell Midcap Index companies with relatively lower price-to-book ratios, lower I/B/E/S forecast medium-term (two-year) growth, and lower sales per share historical growth (five years).

S&P 500 Index is a widely recognized unmanaged index including a representative sample of 500 leading companies in leading sectors of the US economy. Although the S&P 500 Index focuses on the large cap segment of the market, with approximately 80% coverage of US equities, it is also considered a proxy for the total market.

Fixed Income Indexes
Bloomberg Global Aggregate ex-USD Bond Index measures the performance of investment grade debt from 24 local-currency markets. This multi-currency benchmark includes sovereign, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers. Bonds issued in US dollars are excluded.

Bloomberg US Aggregate Bond measures the performance of investment grade, US dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM passthroughs), ABS and CMBS.

Bloomberg US Corporate Bond Index measures the performance of investment grade, fixed-rate, taxable corporate bond market. It includes US dollar-denominated securities publicly issued by US and non-US industrial, utility and financial issuers.

Bloomberg US Corporate High Yield Bond Index measures the performance of the US dollar-denominated, high yield, fixed-rate corporate bond market. Securities are classified as high yield if the middle rating of Moody’s, Fitch and S&P is Ba1/BB+/BB+ or below. Bonds from issuers with an emerging markets country of risk are excluded.

Bloomberg US Long Treasury Index measures the performance of US dollar-denominated, fixed-rate, nominal debt issued by the US Treasury with a maturity greater than 10 years.

Bloomberg US Mortgage Backed Securities Index measures the performance of fixed-rate agency mortgage-backed pass-through securities guaranteed by Ginnie Mae, Fannie Mae and Freddie Mac.

Bloomberg US Treasury Index measures the performance of US dollar-denominated, fixed-rate, nominal debt issued by the US Treasury. Treasury bills are excluded by the maturity constraint but are part of a separate Short Treasury Index.

Bloomberg US Treasury Inflation-Linked Bond Index measures the performance of the US Treasury inflation-protected securities (TIPS) market. Federal Reserve holdings of US TIPS are not index eligible and are excluded from the face amount outstanding of each bond in the index.

Credit Suisse Emerging Market Corporate Index measures the performance of emerging market corporate debt that represents the characteristics, pricing and total return performance of different asset classes within the emerging market corporate universe.

ICE BofA AAA US Corporate Index measures the performance of US dollar-denominated investment grade rated corporate debt publicly issued in the US domestic market with a given credit rating AAA.

ICE BofA AA US Corporate Index measures the performance of US dollar-denominated investment grade rated corporate debt publicly issued in the US domestic market with a given credit rating AA.

ICE BofA Single-A US Corporate Index measures the performance of US dollar-denominated investment grade rated corporate debt publicly issued in the US domestic market with a given credit rating A.

ICE BofA BBB US Corporate Index measures the performance of US dollar-denominated investment grade rated corporate debt publicly issued in the US domestic market with a given credit rating BBB.

ICE BofA BB US High Yield Index measures the performance of US dollar-denominated below investment grade rated corporate debt publicly issued in the US domestic market with a given credit rating BB.

ICE BofA Single-B US High Yield Index tracks the performance of US dollar-denominated below investment grade rated corporate debt publicly issued in the US domestic market with a given credit rating B.

ICE BofA CCC & Lower US High Yield Index measures the performance of US-dollar denominated below investment grade rated corporate debt publicly issued in the US domestic market with a given credit rating CCC or below.

Real Asset Indexes
Alerian MLP Index is a capped, float-adjusted, market capitalization-weighted index designed to track the performance of energy infrastructure master limited partnerships (MLPs).

FTSE EPRA Nareit Global Real Estate Index is a float-adjusted, market capitalization-weighted index designed to track the performance of listed real estate companies in both developed and emerging countries worldwide.

FTSE Gold Mines Index measures the performance of the shares of companies whose principal activity is the mining of gold and encompasses all gold mining companies that have a sustainable, attributable gold production of at least 300,000 ounces a year and that derive 51% or more of their revenue from mined gold in the worldwide market.

FTSE Gold Mines EMEA Index is a subindex of the FTSE Gold Mines Index Series. It measures the performance of all gold mining companies that have a sustainable, attributable gold production of at least 300,000 ounces a year and that derive 51% or more of their revenue from mined gold across the Europe/Middle East/Africa (EMEA) region.

FTSE Gold Mines Asia Pacific Index is a subindex of the FTSE Gold Mines Index Series. It measures the performance of all gold mining companies that have a sustainable, attributable gold production of at least 300,000 ounces a year and that derive 51% or more of their revenue from mined gold across the Asia Pacific region.

FTSE Gold Mines Americas Index is a subindex of the FTSE Gold Mines Index Series. It measures the performance of all gold mining companies that have a sustainable, attributable gold production of at least 300,000 ounces a year and that derive 51% or more of their revenue from mined gold across the US, Canada and Latin America.

ICE US Dollar Index is a geometrically averaged calculation of six currencies weighted against the US dollar: the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc.

S&P Global ex-US Property Index defines and measures the investable universe of publicly traded property companies domiciled in developed and emerging markets excluding the US. The companies included are engaged in real estate-related activities such as property ownership, management, development, rental and investment.

S&P Global Infrastructure Index measures the performance of 75 companies from around the world chosen to represent the listed infrastructure industry while maintaining liquidity and tradability. To create diversified exposure, the index includes three distinct infrastructure clusters: energy, transportation and utilities.

S&P Global Natural Resources Index measures the performance of 90 of the largest publicly traded companies in natural resources and commodities businesses that meet specific investability requirements, offering investors diversified and investable equity exposure across three primary commodity-related sectors: agribusiness, energy, and metals and mining.

S&P GSCI® is a composite index of commodity sector returns representing an unleveraged, long-only investment in commodity futures that is broadly diversified across the spectrum of commodities.

Alternative Credit Indexes
Cliffwater Direct Lending Index is an asset-weighted index of more than 8,000 directly originated middle-market loans.

JPMorgan CLO Index is a total return benchmark for US dollar-denominated broadly syndicated, arbitrage US CLO debt.

JPMorgan CLO AAA Index is a subset of the JPMorgan CLO Index that only tracks the AAA rated CLO debt.

JPMorgan CLO AA Index is a subset of the JPMorgan CLO Index that only tracks the AA rated CLO debt.

JPMorgan CLO A Index is a subset of the JPMorgan CLO Index that only tracks the A rated CLO debt.

JPMorgan CLO BBB Index is a subset of the JPMorgan CLO Index that only tracks the BBB rated CLO debt.

JPMorgan CLO BB Index is a subset of the JPMorgan CLO Index that only tracks the BB rated CLO debt.

JPMorgan CLO B Index is a subset of the JPMorgan CLO Index that only tracks the B rated CLO debt.

Morningstar LSTA US Leveraged Loan Index is a market value-weighted index designed to measure the performance of the US leveraged loan market.

Morningstar LSTA US BBB Ratings Loan Index is a market value-weighted index designed to measure the performance of the US leveraged loan market for loans with BBB- to BBB+ ratings as rated by S&P Global Ratings.

Morningstar LSTA US BB Ratings Loan Index is a market value-weighted index designed to measure the performance of the US leveraged loan market for loans with BB- to BB+ ratings as rated by S&P Global Ratings.

Morningstar LSTA US B Ratings Loan Index is a market value-weighted index designed to measure the performance of the US leveraged loan market for loans with B- to B+ ratings as rated by S&P Global Ratings.

Morningstar LSTA US CCC Ratings Loan Index is a market value-weighted index designed to measure the performance of the US leveraged loan market for loans with CCC- to CCC+ ratings as rated by S&P Global Ratings.

FEF Distributors, LLC (Member SIPC) distributes certain First Eagle products; it does not provide services to investors. As such, when FEF Distributors, LLC presents a strategy or product to an investor, FEF Distributors, LLC does not determine whether the investment is in the best interests of, or is suitable for, the investor. Investors should exercise their own judgment and/or consult with a financial professional prior to investing in any First Eagle strategy or product. First Eagle Investments is the brand name for First Eagle Investment Management, LLC and its subsidiary investment advisers. © 2023 First Eagle Investment Management, LLC. All rights reserved.