As global markets face prolonged macroeconomic headwinds and a potential recession, institutional investors are turning more attention to manager performance as a guidance for investments in the Collateralized Loan Obligation (CLO) market, whose unique feature is active management of underlying collateral assets.
During the reinvestment period, experienced managers with a strong credit selection skillset and a sound risk framework can add significant value by taking advantage of market volatility. In times of uncertainty, investors are also more selective with their choice of managers.
So, how should we view CLO managers when the markets are under pressure? What are the factors to track when evaluating manager performance?
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