Floating rate debt fund CVC Income & Growth (CVCG) has sought to reassure investors after falls of more than 8% in its sterling and euro share classes this year.

While private credit markets have been hit by the gating of funds run by Blue Owl Capital and BlackRock, CVCG says it is mainly exposed to publicly traded corporate debt with around 98% of loans and bonds in its portfolio priced daily by brokers.

Moreover, it has just 3% in loans to software companies, unlike the far greater exposure of the suspended private credit funds, meaning it is less troubled by concerns over the impact of artificial intelligence on these businesses.

The current war in the Middle East has reversed expectations for interest rate cuts by the Bank of England as surging oil price puts upward pressure on inflation. That is a challenge for conventional bond funds but, with its focus on floating-rate instruments, CVCG will benefit from a “higher-for-longer” rates environment.

Pieter Staelens and Mitchell Glynn, its fund managers at CVC Credit Partners, said: “The outlook for 2026 was fairly benign at the start of the year, which was reflected in credit spreads. Since then, markets have repriced software risk in both public equity and public credit markets given the fast-paced developments we’ve seen in AI. 

“After the recent developments in the Middle East, markets have also started to price in higher for longer oil prices which could result in a slowdown in growth, but also higher inflation, potential supply chain issues and a reduction in consumer confidence. 

“At this point, it’s impossible to say where the conflict is heading. The portfolio continues to generate income in line with expectations, but the marks on the underlying assets move on a daily basis reflecting sentiment around the conflict and global growth.  

“Both public equity and credit markets have repriced since the start of the year, resulting in a small negative NAV performance year to date.  This shows that public credit markets are functioning.”

The company’s fact sheet shows that in the five years to 31 January, CVCG delivered a 59% total underlying return including its quarterly dividends. Its shares yield 8.7% and stand on a small 2% discount to net asset value (NAV). The shares softened 0.2% to 111.8p this morning.

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