Where to Find Value in CLOs Today

CLOs offer investors attractive yield, transparency, liquidity and structural protections that set them apart from other areas of credit. Laila Kollmorgen, Global Head of CLO Tranche Investing at PineBridge Investments (now part of MetLife Investment Management), recently joined the CLO Investor Podcast to discuss her firm’s bottoms-up approach to underwriting and where she currently sees value across the capital stack.

Key moments from the conversation:

• [03:43] CLOs standout for their loan-level transparency, which makes it possible to assess risk loan-by-loan.
• [05:49] Team independently re-underwrites the underlying loans in each CLO, building its own view of the likelihood of default and expected recovery for each loan.
• [10:07] Recently launched interval fund targets BBB-rated tranches down through equity, providing investors a way to reach for higher yield without the daily liquidity demands of an ETF.
• [11:05] AA-BBB strategy blends easy-to-trade tranches with lower-rated ones that pay more, balancing daily liquidity needs with the pursuit of higher yield.
• [12:54] CLO equity historically performs well when purchased following market drawdowns, but 2025 broke that pattern.
• [17:13] Software loans are an area to watch, as AI starts to threaten the business models of some companies, raising the risk of defaults and reducing what investors recover if they happen.
• [27:14] Recoveries have trended lower recently, in part due to distressed debt exchanges that often end up in default anyway.
• [29:20] Broadly syndicated CLOs preferred over middle-market/private credit CLOs because of greater liquidity and transparency.
• [31:03] Heavy buying from insurance companies has pushed up prices on AA/A tranches, creating relative value opportunities in junior BBBs.
• [28:36] Investors rushing to pull money out of private credit and BDC interval funds underscore a structural advantage for CLOs: the ability to buy and sell easily, even in stressed markets.

How to Invest in CLOs

PineBridge sub-advises VanEck’s suite of CLO funds, drawing on the team’s decades of experience as both a CLO manager and CLO trance investor:

• VanEck CLO ETF (CLOI): provides access to investment grade floating-rate CLOs.
• VanEck AA-BB CLO ETF (CLOB): targets the mezzanine tranches of the CLO capital stack, offering enhanced yield opportunity relative to investment grade CLOs.
• VanEck CLO Opportunities Fund: an interval fund structure built to accommodate less liquid, higher-yielding parts of the CLO market, including BBB, BB and equity tranches.