Portfolio Managers Nick Childs and Jessica Shill discuss why collateralized loan obligations (CLOs) deserve a closer look in today’s environment given their low interest rate sensitivity, attractive yields and diversification benefits.

Key Takeaways:

• The current mix of low yields, high inflation and rising interest rates should prompt investors to be more thoughtful about how – not if – they should take bond exposure.
• Floating-rate securities such as CLOs can help diversify a portfolio of government and corporate bonds while offering competitive yields and lower sensitivity to rising rates.
• Although the CLO market has become accessible to a wider range of investors in recent years, we believe a rigorous due diligence process remains a critical component of investing in the asset class.