Cloud 9fin Tranche Talk — CLO portfolio trading and allocating in a tough market with OHA’s Tommy Wong
Sep 22, 2025
Tommy Wong, a seasoned partner and portfolio manager at Oak Hill Advisors with over 20 years in the loan market, joins the conversation to dissect the current CLO landscape. He elaborates on the implications of macroeconomic shifts, such as rate easing and growth dynamics. Tommy shares insights on credit selection in a low-arb market and the impact of mergers and acquisitions on loan supply. He emphasizes a cautious investment mindset, highlighting the importance of practical trading strategies and sector risk management.
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Easing Could Be A Return To Neutral
- Rate easing may simply be a dial back to neutral rather than recession avoidance, changing allocation choices.
- If growth stays muted, prioritize current yield via fixed income and floating-rate assets like loans and CLOs.
Duration Correlation Is Uncertain
- Long and short rates can decouple due to geopolitical and fiscal changes, blurring classic duration relationships.
- That decoupling makes shorter-duration floating assets like loans relatively attractive for some allocations.
Use Bond Buckets Conservatively
- Avoid routinely using the bond bucket offensively because it creates asset-liability mismatch in CLOs.
- Use bond buckets defensively to manage duration and volatility when needed.