Why CLOs are outperforming core bonds in today’s market

CLOs provide the attributes that investors look for in their core bond portfolios: attractive yield, safety, and diversification, and have continued to outperform core fixed income through this most recent volatility. As a result, an allocation to CLOs in a core bond portfolio has provided better outcomes year to date.

In fact, CLOs have provided the best risk-adjusted returns versus other fixed income asset classes over the past decade, through various rate and credit cycles. CLO returns benefit from high yields and spreads versus similarly rated bonds, structural protections that have resulted in extremely low default risk, and rate insensitivity. More recently, strong technical and fundamentals have provided a tailwind to credit spreads. CLOs have outperformed core bonds as well as the broad high yield bond market this year.

Volta Finance Ltd (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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