4 minutes to read by  BlueBay Fixed Income team, L.Best, T.Mowl 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 the relevant affiliated entity listed herein. 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, the material may be distributed by RBC GAM Inc., (including PH&N Institutional), which is regulated by each provincial and territorial securities commission. In the United States (US), this material may be distributed by RBC GAM-US, an SEC registered investment adviser. In the United Kingdom (UK) the material may be distributed by RBC GAM-UK, which is authorised and regulated by the UK Financial Conduct Authority (FCA), registered with the US Securities and Exchange Commission (SEC), and a member of the National Futures Association (NFA) as authorised by the US Commodity Futures Trading Commission (CFTC). In the European Economic Area (EEA), this material may be distributed by BlueBay Funds Management Company S.A. (BBFM S.A.), which is regulated by the Commission de Surveillance du Secteur Financier (CSSF). In Germany, Italy, Spain and Netherlands the BBFM S.A. is operating under a branch passport pursuant to the Undertakings for Collective Investment in Transferable Securities Directive (2009/65/EC) and the Alternative Investment Fund Managers Directive (2011/61/EU). In Switzerland, the material may be distributed by BlueBay Asset Management AG where the Representative and Paying Agent is BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16, 8002 Zurich, Switzerland. In Japan, the material may be distributed by BlueBay Asset Management International Limited, which is registered with the Kanto Local Finance Bureau of Ministry of Finance, Japan. Elsewhere in Asia, the material may be distributed by RBC GAM-Asia, which is registered with the Securities and Futures Commission (SFC) in Hong Kong. In Australia, RBC GAM-UK is exempt from the requirement to hold an Australian financial services license under the Corporations Act in respect of financial services as it is regulated by the FCA under the laws of the UK which differ from Australian laws. All distribution-related entities noted above are collectively included in references to “RBC GAM” within this material.

This material is not available for distribution to investors in jurisdictions where such distribution would be prohibited.

The registrations and memberships noted should not be interpreted as an endorsement or approval of RBC GAM by the respective licensing or registering authorities.

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. Not all products, services or investments described herein are available in all jurisdictions and some are available on a limited basis only, due to local regulatory and legal requirements. Additional information about RBC GAM may be found at www.rbcgam.com. Recipients are strongly advised to make an independent review with their own advisors and reach their own conclusions regarding the investment merits and risks, legal, credit, tax and accounting aspects of all transactions.

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, expressed 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 without notice.

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.

® / ^TM Trademark(s) of Royal Bank of Canada. Used under licence.
© RBC Global Asset Management Inc., 2026

document.addEventListener("DOMContentLoaded", function() { let wrapper = document.querySelector('div[data-location="inst-insight-article-additional-resources"]'); if (wrapper) { let liElements = wrapper.querySelectorAll('.link-card-item'); liElements.forEach(function(liElement) { liElement.classList.remove('col-xl-3'); liElement.classList.add('col-xl-4'); }); } }) .section-block .footnote:empty { display: none !important; } footer.section-block * { font-size: 0.75rem; line-height: 1.5; }