XA Investments LLC (XAI), the investment manager of XAI Floating Rate & Alternative Income Trust (XFLT), has urged shareholders to approve a new investment sub-advisory agreement with Rockford Tower Asset Management, L.L.C., a wholly owned subsidiary of King Street Capital Management. The proposal will be decided during the Fund's Special Meeting on July 30.

The recommendation follows the termination of the Fund's previous sub-adviser, Octagon Credit Investors, and represents one of the most significant portfolio management changes in XFLT's recent history. According to XAI, the board conducted an extensive evaluation process lasting approximately one year before selecting King Street as its preferred investment partner.

The review reportedly included 12 board meetings, detailed due diligence, and an assessment of multiple potential sub-advisers based on investment capabilities, operational resources, and long-term strategic fit.

Why King Street Was Selected

King Street Capital Management is an established alternative asset management firm with roughly three decades of experience in global credit investing. The firm oversees approximately $30 billion in assets under management, including more than $13 billion invested across U.S. and European collateralized loan obligation (CLO) strategies.

If approved, Rockford Tower Asset Management would manage XFLT within its existing investment mandate, focusing on floating-rate credit investments while maintaining the Fund's current investment objectives.

According to the board, the transition is intended to provide shareholders with access to broader investment opportunities across U.S. and European credit markets while benefiting from King Street's research capabilities, active trading expertise, and global credit platform.

Importantly for investors, XAI stated that the proposed sub-advisory agreement would not introduce additional management fees.

Independent Proxy Firms Support the Proposal

The proposal has also received backing from two major proxy advisory firms, Institutional Shareholder Services (ISS) and Glass Lewis.

Proxy advisory firms evaluate corporate governance proposals and provide voting recommendations to institutional investors. Their recommendations often influence voting outcomes for public funds and listed companies, particularly when governance or investment management changes are involved.

In this case, both organizations recommended that shareholders vote in favor of approving the King Street sub-advisory agreement, describing it as the preferred path forward for the Fund.

Experienced Credit Investment Team to Lead Portfolio

Should shareholders approve the proposal, Young Choi will become the primary portfolio manager for XFLT.

Choi is a Partner and Global Head of Trading at King Street and has spent approximately 20 years with the firm. He also serves on several of the firm's investment, risk, and pricing committees, overseeing credit investment strategies across multiple markets.

Before joining King Street in 2006, Choi managed leveraged loan and CLO portfolios at Citadel Investment Group after beginning his career with Bain & Company.

The broader investment platform includes more than 260 employees worldwide, with over 90 investment professionals located across the United States, London, Singapore, and Dubai.

For enterprise investors evaluating asset managers, the depth of portfolio management resources has become an increasingly important differentiator as credit markets grow more complex and volatile.

Why the Change Matters for Credit Fund Investors

Investment sub-advisers play a central role in managing portfolio construction, credit selection, trading activity, and risk management for closed-end funds.

Replacing a sub-adviser can significantly influence long-term fund performance because the investment team's research process, portfolio allocation strategy, and risk controls directly affect returns.

Industry analysts have noted that active credit management is becoming increasingly important as interest rate uncertainty and corporate refinancing activity continue reshaping leveraged loan and private credit markets.

According to Preqin, global private debt assets under management have expanded rapidly over the past decade, reflecting continued institutional demand for diversified credit strategies. Meanwhile, McKinsey & Company has highlighted private credit as one of the fastest-growing segments within alternative asset management, supported by increasing investor demand for income-generating assets.

Against this backdrop, XFLT's board believes that appointing a larger global credit specialist could improve the Fund's ability to identify investment opportunities across multiple credit sectors while adapting more quickly to changing market conditions.

Market Landscape

Alternative credit managers continue to expand their role within institutional investment portfolios as demand grows for floating-rate assets and diversified income strategies. Rising interest rates over recent years have renewed investor interest in leveraged loans and CLOs, making experienced credit selection increasingly valuable. Large alternative asset managers are also investing heavily in research, risk analytics, and global trading infrastructure to improve portfolio performance across complex credit markets.

Competition in this market includes established investment firms managing institutional credit, private debt, leveraged loans, and structured finance portfolios. Scale, access to proprietary deal flow, and disciplined risk management have become key competitive advantages as investors seek consistent income alongside downside protection.

Top Insights

• XFLT shareholders will vote on appointing King Street's subsidiary as the Fund's new investment sub-adviser after a year-long board evaluation process.
• The proposed transition would maintain XFLT's existing investment mandate while expanding access to global credit investment opportunities without introducing new management fees.
• Independent proxy advisors ISS and Glass Lewis have both recommended shareholder approval, strengthening governance support for the proposal.
• King Street brings approximately $30 billion in assets under management and extensive experience managing CLO and alternative credit portfolios across global markets.
• The appointment reflects broader industry demand for experienced active credit managers as institutional investors navigate increasingly complex fixed-income markets.

FAQ

Q1. What is the King Street Sub-Adviser?
Rockford Tower Asset Management is a subsidiary of King Street Capital Management that specializes in managing alternative credit investments, including collateralized loan obligations and leveraged loan portfolios.

Q2. What does the proposed agreement change?
If approved, King Street will replace the Fund's previous sub-adviser while maintaining XFLT's existing investment objectives and strategy.

Q3. Why does the XFLT board support the proposal?
The board believes King Street's global credit expertise, research capabilities, and investment platform could improve long-term portfolio performance without increasing fees.

Q4. Who will manage the XFLT portfolio?
Young Choi, Partner and Global Head of Trading at King Street, is expected to become the Fund's lead portfolio manager if shareholders approve the proposal.

Q5. Why is this important for investors?
A change in investment management can influence portfolio strategy, credit selection, risk management, and ultimately long-term investment performance.

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