Jonathan Cohen, Co-Founder and Chief Executive Officer of Oxford Park Income Fund, Inc., joined Keith Black, Managing Director of RIA Channel, to discuss Collateralized Loan Obligations (CLOs).
Oxford Funds started in 2002 as a corporate credit investment company and launched a publicly traded Business Development Company (BDC) in 2003. Today, the firm manages ~$2.1 billion, predominately in the CLO equity tranche.
Cohen explains that CLOs may be the world’s least well-understood $1 trillion asset class. CLOs are pools of U.S.-syndicated corporate loans that have been packaged into a special purpose vehicle (SPV). The CLO SPV issues debt with different tranches that pay different interest rates. For example, a CLO may borrow $450 million in tranches rated from AAA to BB. While Oxford Park is occasionally an investor in BB tranches, they principally invest in the equity tranche.
Investors in the equity tranche may have the opportunity to benefit from the arbitrage return between the cost of funds of the CLO and the return on the corporate loans held in the structure. CLO equity investments have the potential to generate meaningful risk-adjusted returns that may be less correlated to the returns from other investment strategies. Certain CLO equity tranches may produce a cash return of over 25%. This may be higher than the total return of the investment, but capital may be returned fairly quickly to investors.
WEBCAST – Income Strategies with CLOs
Collateralized Loan Obligations (CLOs) can be used to generate income and alpha for client portfolios. Institutional investors utilize CLOs in specialized markets where expertise and scale may unlock unique investing opportunities. Join our team of experts as they provide insights and cover:
- Benefits and Risks of the CLO Market
- Scale, Access, and Expertise of an Institutional Investor
- Income Generation and Alpha with CLO Investing
- Market Outlook and Historical Perspective
Accepted for 1 CFP® / IWI / CFA CE Credit
Featured Speakers:
Jonathan Cohen, Co-Founder, Chief Executive Officer
Joe Kupka, Managing Director, Portfolio Manager
Title: Income Strategies with CLOs
Date: Wednesday, February 14, 2024
Time: 1 PM ET
(Now On Demand)
Resources:
Oxford Park Income Fund, Inc.
Oxford Park Fact Sheet
Oxford Funds Sponsor Fact Sheet