Collateralized loan obligations (CLOs) have been attracting increasing attention as investors broaden their horizons in the search for yield.
While many investors know that CLOs have historically yielded attractive performance versus other fixed income strategies, they may not know the full extent of the benefits – as well as the distinct risks.
With PineBridge’s deep legacy in specialized fixed income, we aim to demystify CLOs for investors considering an allocation to this asset class.
Put simply, a collateralized loan obligation is a portfolio of leveraged loans that is securitized and actively managed as a fund. Each CLO is structured as a series of tranches that are interest-paying bonds, along with a small portion of equity.
While many investors know that CLOs have historically yielded attractive performance versus other traditional fixed income strategies, they may not know the full extent of the benefits – as well as the distinct risks.
CLOs are complex, but well worth understanding. We provide a simple breakdown of how CLOs work, what they’re made of, and how they mitigate risk to investors.
CLOs have gotten better with age, with enhancements aimed to mitigate structural risk – and they may be especially compelling in today’s low-yield environment.
Laila Kollmorgen, portfolio manager, explains why investors shouldn't confuse CLOs with CDOs.
Extensive experience – not only as a CLO manager, but as an issuer as well – with senior leadership in place for nearly 20 years, and a team of credit analysts, most of whom have been with us for at least 10 years.*
Consistent investment process informed by rigorous, proprietary credit analysis across sectors and regions.
In fixed income, our multi-billion-dollar portfolio is invested across the spectrum of developed and emerging markets, investment grade debt, leveraged finance, and multi-sector strategies.
*31 December 2021.
Laila Kollmorgen, CLO tranche portfolio manager, explores our in-depth credit analysis and due diligence, as well as experience both issuing and managing CLOs.