Monday, December 02, 2013
Check Under The Hood
Here is a gem of a Wall Street Journal article (WSJ subscription required) that I hope was not lost in last week's Thanksgiving feasting and traveling. Collateralized loan obligations (CLOs) are showing up in retail investments, including business development companies (BDCs). CLOs have multiple tranches that offer varying levels of risk. In general, I question the transparency of BDC portfolios, and with CLOs appearing in multiple BDC portfolios my suspicions are not allayed.
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2 comments:
In all fairness, CLOs held up pretty good. They were a GREAT buy about 1 - 2 years ago, but are pretty much settled down now.
Not knocking CLOs but (poorly) pointing out that retail products are now buying sophisticated products. I've no clue what tranches the BDCs are buying.
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