An Introduction to Collateralized Loan Obligations

CLOs have been gaining wider prominence in markets in recent years, and it’s no surprise why. They have historically offered a compelling combination of above-average yield and potential appreciation. But for many investors, the basics of how they work, the benefits they can provide, and the risks they pose are wrapped in complication, which is why they’re also often misconstrued by the financial media and some market participants.

In spite of this, we believe CLOs are attractive investments and well worth the time and effort required to understand them.

What is a CLO?

Put simply, a CLO is a portfolio of predominantly leveraged loans that is securitized and managed as a fund. 

Volta Finance Limited (LON:VTA) is a closed-ended limited liability company registered in Guernsey. Volta’s investment objectives are to seek to preserve capital across the credit cycle and to provide a stable stream of income to its Shareholders through dividends that it expects to distribute on a quarterly basis.

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