PGIM Floating Rate Income Fund Q3 2025 Commentary
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PGIM Investments37 FollowersFollow5ShareSavePlay(7min)CommentsSummaryU.S. leveraged loans continued to generate positive total returns in the third quarter, supported by retail fund inflows, limited new supply, and robust CLO issuance.In the third quarter of 2025, the PGIM Floating Rate Income Fund Class Z returned 1.49% net of fees and underperformed its benchmark, the S&P UBS Leveraged Loan Index.Despite elevated interest rates, stable credit fundamentals and a lack of near-term maturities continued to keep defaults manageable.Following Q3's robust performance, we have renewed our 2025 total return forecast to 6.5%.To that end, avoidance of defaults will likely be the biggest driver of alpha over the next 12-24 months. Akarapong Chairean/iStock via Getty Images Performance Recap In the third quarter of 2025, the PGIM Floating Rate Income Fund Class Z returned 1.49% net of fees and underperformed its benchmark, the S&P UBS Leveraged Loan Index, gross of fees.This article was written byPGIM Investments37 FollowersFollowPGIM Investments, a subsidiary of PFI, is an investment adviser and the investment manager to all PGIM US open-end investment companies and manager or administrator to closed-end investment companies. Note: This account is not managed or monitored by PGIM Investments, and any messages sent via Seeking Alpha will not receive a response. For inquiries or communication, please use PGIM Investments' official channels.Quick InsightsWhat is the 2025 total return forecast for FRFZX and its drivers?The 2025 total return forecast is 6.5%, supported by strong YTD returns, favorable carry conditions, and low price volatility through year-end.How is portfolio positioning shifting in response to market conditions?FRFZX continues to overweight public BB and high B loans, avoiding sponsor-owned, low B, and CCC loans, expecting lower-quality credits to face greater challenges.What are the key risks and potential headwinds for FRFZX going forward?Aggressive rate cuts could trigger outflows as investors shift to fixed-rate securities, and security selection—especially avoiding defaults—will be critical for alpha over the next 12–24 months.Recommended For You