Cloud 9fin CLOs are no longer exotic
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Jun 23, 2025 Sumer Chopra, Director at Alumia, specializes in simplifying the complex world of Collateralized Loan Obligations (CLOs). In this discussion, Sumer unveils how CLOs have transformed from a niche product into a staple for institutional investors. He explores the rising interest among family offices, the outperformance of double-Bs and single-Bs over CLO equity, and the legacy biases still affecting some endowments post-GFC. They also cover the essential elements of an impactful CLO fund manager pitch and the growth of evergreen funds in today’s market.
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CLOs: From Exotic to Essential
- CLOs have shifted from exotic products to essential portfolio components for various investors.
- They now serve broader purposes like diversification and credit quality, not just alpha generation or yield.
Prioritize CLO Investor Education
- CLO managers must prioritize in-depth investor education about structural changes and improved risk management.
- Continuous communication and transparency are crucial to dispel past misconceptions linked to financial crises.
CLOs Enable Flexible Portfolio Construction
- CLOs offer diverse investment options across the capital stack to meet different risk-return preferences.
- Investors appreciate the liquidity and institutionalization allowing movement between tranches for optimal portfolio fit.