What's the Big Idea? CLOs Are Starting to Look Alike

The video discusses leveraged loans and CLOs, highlighting concerns about their risks and diversification. It notes that while individual CLO portfolios are diversified, the overlap between different CLOs is increasing, posing potential risks. The video references historical financial crises to emphasize the importance of understanding correlation risks. It concludes by warning investors about the underappreciated risks of CLOs due to market trends and portfolio similarities.

What are leveraged loans and how are they typically structured?

What concerns are raised regarding the exposure of leveraged loans during an economic downturn?

What trend has been observed in the overlap of collateral among CDOs since 2017?

What lessons can be learned from the structured finance practices before the financial crisis?

How does the diversification of collateral in CDO portfolios impact risk?