Investment Portfolio
TFG seeks to invest in a variety of assets and asset classes (potentially with different investment durations) across multiple geographies.
Senior secured bank loans represent the substantial majority of assets underlying the portfolio and are financed via term, non-recourse, cash-flow based liabilities. TFG currently gains exposure to these assets primarily through investments in the residual tranches of collateralized loan obligations ("CLO") products and also has had exposure through previous investments in the residual tranches of collateralized debt obligation ("CDO") products, which are both securitized interests in underlying assets assembled by asset managers and divided into tranches based on their degree of credit risk.
The asset class primarily represented in TFG's current portfolio consists of leveraged loans, comprised of (a) broadly syndicated senior secured loans of U.S. borrowers; (b) broadly syndicated senior secured loans of European borrowers; and (c) middle-market senior secured loans of U.S. borrowers. Notwithstanding the Investment Manager’s primary focus to date on the leveraged loan asset class (whether accessed through CLOs or via direct loan investments), the Investment Manager may seek to achieve its investment objective through investments in other opportunities, assets or asset classes, which may be unrelated to the leveraged loan asset class (including, for example, real estate investments).
The Investment Manager actively manages TFG's investment portfolio as systematic credit analysis can serve as an effective risk management tool. It seeks to regularly evaluate TFG's underlying credit exposures as well as CLO quality and coverage tests, as it believes this may more effectively position the portfolio against outsized losses.