RT Journal Article SR Electronic T1 How to Value CLO Managers: Tell Me Who Your Manager
Is, I’ll Tell You How Your CLO Will Do JF The Journal of Structured Finance FD Institutional Investor Journals SP 49 OP 56 DO 10.3905/jsf.2013.19.3.049 VO 19 IS 3 A1 Serhan Secmen A1 Batur Bicer YR 2013 UL https://pm-research.com/content/19/3/49.abstract AB Collateralized loan obligations (CLOs) have proven to be a unique securitized product, especially in light of their significant outperformance compared with that of their asset-backed peers during and after the most recent crises. Having a pool of loans as the underlying collateral that is actively managed by CLO managers has been the most important factor for this performance. Therefore, an astute CLO investor needs to analyze the manager as well as the collateral and the structure to make a sound investment decision. In this article, the authors lay out a framework to list the factors investors should consider when investing in CLO managers. They break down the factors that determine the overall characteristics of a manager into two categories: ones that can be qualitatively investigated and ones that can be analyzed using available track records. The next step is to focus on the consistency, explicability, and repeatability of the manager’s performance. Finally, different investors have different objectives, so investors should have a clear understanding of what types of managers will serve them best.TOPICS: CLOs, CDOs, and other structured credit, portfolio construction