In this episode of The Last Tranche, Ujjaval Desai, head of structured products investing at Sound Point Capital Management, shares his ideas about the investment opportunity across the CLO equity universe.

Desai says that the best strategies for investing in CLO equity could see returns of up to 20%, but on the other hand, firms that fail to make careful investment decisions could see negative returns.

Desai speaks to the various characteristics of CLOs that impact eventual returns including manager strategies, deal vintage, the source of equity capital and more. He also speaks to some of the trends impacting the loan and CLO markets today, noting that the leveraged loan market has actually shrunk for the first time in 2023.