E269 – An Intro to CLOs

In today’s episode, special guest Mark Jarosz, and your host, Zayla Saunders, take us to the top of the cash flow waterfall to provide must-know answers to your collateralized loan obligation, or CLO, questions.

Zayla Saunders is a Senior Associate of Online Distribution at BMO Global Asset Management (GAM). She is joined on the podcast by Mark Jarosz, Lead, Private Credit, Alternatives, at BMO GAM. Recorded live on Wed, May 21, 2025.

 

ETFs:

• BMO AAA CLO ETF (ZAAA)
• BMO AAA CLO ETF (Hedged Units) (ZAAA.F)
• BMO AAA CLO ETF (USD Units) (ZAAA.U)

Collateralized Debt Obligation (CDO): A structured financial product where a bank or other entity pools together various types of debt, like mortgages, bonds, and loans, and repackages them into tranches, or classes of securities, based on their risk level.

Correlation: A statistical measure of how two securities move in relation to one another. Positive correlation indicates similar movements, up or down together, while negative correlation indicates opposite movements.

There have historically been zero defaults on AAA tranches through the 30-year history of CLOs. Source:Bloomberg, as of December 31, 2024. Past default rates do not guarantee future default rates.

Source: Size of the CLO market and CLO ETF market, Bank of America, factbook March, 2025.

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