Please ensure Javascript is enabled for purposes of website accessibility Collateralized Loan Obligations: A securitized products primer - Janus Henderson Investors
For institutional investors in Sweden

Collateralized Loan Obligations: A securitized products primer

Portfolio Managers John Kerschner, Nick Childs, and Jessica Shill discuss how collateralized loan obligations (CLOs) are created, their key characteristics, and what they might offer investors.

John Kerschner, CFA

John Kerschner, CFA

Head of US Securitised Products | Portfolio Manager


Jessica Shill

Jessica Shill

Portfolio Manager | Securitised Products Analyst


Nick Childs, CFA

Nick Childs, CFA

Head of Structured and Quant Fixed Income| Portfolio Manager


7 Mar 2024
11 minute read

Key takeaways:

  • While CLOs have been a part of the securitized products market for more than 30 years, their availability to a wider range of investors is a more recent development.
  • At around $1 trillion in assets, the U.S. CLO market is large, liquid, and fast approaching the $1.3 trillion high-yield market in terms of size.
  • With their high credit ratings, floating rate coupons, attractive yields, and diversification benefits, we believe an allocation to CLOs may be a key strategic holding within a diversified portfolio.

 

CLOs are managed portfolios of bank loans that have been securitized into new instruments of varying credit ratings. They have increasingly become the link between the financing needs of smaller companies and investors seeking higher yields.

CLOs have been a part of the U.S. securitized products market since the late 1980s. Historically, most CLOs were privately sold to large institutional investors such as banks, insurance companies, and asset management companies. But as the market has grown, CLOs have become more broadly accessible to retail investors.

Download PDF

JHI

JHI

 
 

These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.

 

Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

 

The information in this article does not qualify as an investment recommendation.

 

Marketing Communication.

 

Glossary

 

 

 

John Kerschner, CFA

John Kerschner, CFA

Head of US Securitised Products | Portfolio Manager


Jessica Shill

Jessica Shill

Portfolio Manager | Securitised Products Analyst


Nick Childs, CFA

Nick Childs, CFA

Head of Structured and Quant Fixed Income| Portfolio Manager


7 Mar 2024
11 minute read

Key takeaways:

  • While CLOs have been a part of the securitized products market for more than 30 years, their availability to a wider range of investors is a more recent development.
  • At around $1 trillion in assets, the U.S. CLO market is large, liquid, and fast approaching the $1.3 trillion high-yield market in terms of size.
  • With their high credit ratings, floating rate coupons, attractive yields, and diversification benefits, we believe an allocation to CLOs may be a key strategic holding within a diversified portfolio.