Data Analytics for Corporate Debt Markets: Using Data for Investing, Trading, Capital Markets, and Portfolio Management

Closing Comments on Section VIII

A CLO is an alternative way for an investor to get exposure to the leveraged loan asset class. The investor gets the ability to have various degrees of risk depending on what his or her tolerance is. Compared with investing in a mutual fund of leveraged loans versus a CLO tranche, both give the investor exposure to a very diversified pool of assets with a single investment. In buying a mutual fund of leveraged loans, an investor might get more liquidity to be able to withdraw his or her money, but all investors are pari passu¹ with all of the other investors, so there is no way of adjusting to a different level of risk. With the CLO, the investor can choose the level of risk he or she wants and invest in the tranche ...