Capital Allocators – Inside the Institutional Investment Industry
Shiloh Bates – CLO Investing at Flat Rock Global (EP.379)
Apr 11, 2024
Shiloh Bates, Chief Investment Officer at Flat Rock Global and author of "CLO Investing," shares insights from his 25-year career in collateralized loan obligations (CLOs). He discusses the significant evolution of CLOs into a trillion-dollar industry and highlights the importance of loan selection and risk management. Shiloh also examines investment strategies for CLO equity, the advantages of interval funds over traditional credit vehicles, and the importance of education in the sector, rounding out the conversation with personal reflections on life beyond finance.
50:22
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Quick takeaways
- CLO market growth driven by yield-hungry investors seeking 10% returns from first-line loans.
- CLO equity provides mid-teens returns with lower risk due to structured quarterly distributions and floating-rate securities.
Deep dives
The Evolution of CLO Market
The CLO market has significantly evolved from a niche sector with $6 billion AUM in six managers to over a trillion in AUM and 100 active managers today. The growth is driven by investors seeking yield with first-line loans offering close to 10% returns. CLO securities performance over the past 30 years has been strong, attracting more investors to the asset class.
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