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Spreads among traditional fixed income assets remain tight even as credit risk may be on the rise amid widespread uncertainty. Against this backdrop, investors in search of attractive income and diversification would be wise to investigate risk-remote opportunities among collateralised loan obligations, or CLOs, according to Edwin Wilches, Co-Head of Securitised Products at PGIM. In this Focus guide, Wilches details the unique attributes of CLOs, corrects common misperceptions about them, and explains why he believes high-quality CLO tranches offer some of the best risk-return profiles in fixed income. With new products, including the PGIM Global AAA CLO Fund, expanding access to the asset class beyond its institutional roots, Wilches presents a compelling case for adding CLOs to fixed income allocations.
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Focus is a publication that aims to bring you face-to-face with a selection of key investment managers, advisers and providers from across the institutional pensions market.
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CLOs explained:
CLOs explained: Institutional mainstay goes mainstream
Institutional mainstay goes mainstream
Past performance is not a guarantee or a reliable indicator of future results. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. The views expressed herein are those of PGIM investment professionals at the time the comments were made, may not be reflective of their current opinions, and are subject to change without notice. Neither the information contained herein nor any opinion expressed shall be construed to constitute investment advice or an offer to sell or a solicitation to buy any securities mentioned herein. For Professional Investors only. All investments involve risk, including the possible loss of capital. In the United Kingdom, information is issued by PGIM Limited with registered office: Grand Buildings, 1-3 Strand, Trafalgar Square, London, WC2N 5HR. PGIM Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) of the United Kingdom (Firm Reference Number 193418). 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The Fund is a sub-fund of Waystone UCITS Platform (Lux) SICAV, a societe d’investissement a capital variable (SICAV) incorporated with limited liability in Luxembourg and authorised as an undertaking for collective investment in transferable securities (UCITS) in the form of an open-ended investment company with variable share capital and subject to the Luxembourg Law of 17 December 2010 relating to undertaking for collective investment, as amended. The Fund Documents as well as the latest annual and semi-annual report and accounts are available in English (and German, where applicable) and can be obtained free of charge at PGIM Limited (at its registered office at Grand Buildings, 1-3 Strand Trafalgar Square, London, WC2N 5HR, United Kingdom), or at www.pgimfunds.com. The KIIDs/KIDs can be obtained from www.pgimfunds.com and are available in one of the official languages of each of the EU Member States into which each sub-fund has been notified for marketing under the Directive 2009/65/EC (the UCITS Directive). In addition, a summary of investor rights is available from www.pgimfunds.com. The funds are currently notified for marketing into a number of EU Member States under the UCITS Directive. PGIM Funds plc can terminate such notifications for any share class and/or fund at any time using the process contained in Article 93a of the UCITS Directive. Risks: An investment in the Fund involves a high degree of risk, including the risk that the entire amount invested may be lost. The Fund is primarily designed to purchase certain investments, which will introduce significant risk to the Fund, including asset performance, price volatility, administrative risk and counterparty risk. No guarantee or representation is made that any Fund's investment program will be successful, or that such Fund's returns will exhibit low correlation with an investor's traditional securities portfolio. Any investment in the Fund will be deemed to be a speculative investment and is not intended as a complete investment program. Investment in the Fund is suitable only for persons who can bear the economic risk of the loss of their investment and who meet the conditions set forth in the PGIM Funds plc's Prospectus, Supplement and Key Investor Information Document (the "KIID") or Key Information Document (the "KID") (collectively the "Fund Documents"). There can be no assurances that the Fund will achieve its investment objective. Prospective and existing investors should carefully consider the risks involved in an investment in the Fund, including, but not limited to, those discussed in the Fund Documents. Prospective and existing investors should consult their own legal, tax and financial advisors about the risks of an investment in the Fund. Any such risk could have a material adverse effect on the Fund and its Shareholders. The return may increase or decrease as a result of currency fluctuations. The use of financial derivative instruments may result in increased gains or losses within the Fund. Where an investor's own currency is different from the currency of the Fund, the return on investment may be affected by fluctuations in the currency exchange rate. The NAV of the Fund is calculated on a daily basis and published on the Fund's website at the following address: www.pgimfunds.com. Political Risk: The value of the Fund’s investments may be affected by uncertainties such as international policy developments, social instability and changes in government policies. This can result in more pronounced risks where conditions have a particular impact on one or more countries or regions. CLO Risks: The Fund invests a substantial proportion of its assets in senior tranches of CLOs. However, there is no requirement that the Fund’s investments be made at the most senior level of notes issued by the relevant CLO vehicle. CLOs, like all debt securities, are subject to the risk of default of principal and interest. CLOs are subject to credit, interest rate, valuation, and prepayment and extension risks. It is possible the even senior CLO debt tranches could experience losses due to default, downgrades of ratings of the underlying collateral and the default of the lower tranches, market anticipation of defaults and investor aversion to CLOs as an asset class. Some of the loans in which an underlying CLO may invest and to which the Fund may indirectly be exposed may be “covenant-lite”, which means the loans or obligations contain fewer financial maintenance covenants than other loans or obligations (in some cases, none) and do not include terms which allow the lender to monitor the borrower’s performance and declare a default if certain criteria are breached. An investment by the Fund in a CLO holding loans may potentially hinder the ability to reprice credit risk associated with the CLO. As a result of this risk, the Fund’s exposure to losses may be increased, which could result in an adverse impact on the Fund’s net income and NAV. Regulatory Risks: Adverse developments with respect to CLO managers, such as regulatory issues or other developments that may impact the ability and/or performance of the CLO manager, may adversely impact the performance of the CLO securities in which the Fund invests. Investors should be aware that the Investment Manager and the Fund will be subject to the Securitisation Regulation, which may be amended over time. The nature of such amendments and their impact on the Fund are unknown. © 2025 Prudential Financial, Inc. (PFI) of the United States and its related entities. For more important information please visit UCITS Disclosure.
EXPERT INSIGHTS
consisted of subprime residential mortgages, CLOs are backed by senior secured corporate loans, which, for the record, fared meaningfully better during the credit crisis.
ollateralised loan obligations, or CLOs, often get a bad rap. Many investors confuse them with CDOs, the securitised debt vehicles that were pivotal in triggering the Great Financial Crisis. But, unlike CDOs in which the underlying debt generally
C
Understanding the CLO opportunity
has helped drive risk asset valuations ever higher despite the damage wrought by COVID-19, compressing yields and making portfolio income distribution objectives harder to achieve in both equities and fixed income.
I
THE INTERVIEW
Edwin Wilches, Co-Head of Securitised Products
Right now, in my opinion, is a great time to look at the CLO market – arguably, this is one of the best times to look at it
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Explore an asset class known for attractive income, credit resilience and diversification as it expands beyond its institutional origins
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With market volatility a recurring theme amid persistent uncertainty, PGIM’s Edwin Wilches believes now is an opportune time to familiarise investors with the facts about an asset class that aligns with current investor demand to increase yield, reduce risk and enhance diversification.
The numbers generated by CLOs should be welcome reading for fixed income investors who face a market of compressed spreads amid rising credit risk stemming from ongoing geopolitical and economic uncertainty. Wilches believes the backdrop sets up nicely for CLOs and the diversification they offer.
For these reasons, more investors are now integrating CLOs into their fixed income allocations. While approaches vary by risk appetite, there is a notable advantage in their ability to carry highly rated assets while benefitting from diversification.
CLOs as part of a fixed income allocation
Wilches and his team target high-quality CLOs because they believe the top tranches offer the best combination of risk and reward. Though carrying the least amount of risk, the AAA tranche enjoys added protection from the CLO structure.
“When it comes to AAA CLOs, we would say that they are very credit-risk remote and they’re quite resilient,” he says.
“Right now, in my opinion, is a great time to look at the CLO market,” he says. “Arguably, this is one of the best times to look at it.”
Wilches should know. As Co-Head of the Securitised Products Team at PGIM, his CLO experience spans decades and market cycles. During that time, he says CLOs have become “cornerstone” commitments in the firm’s institutional portfolios. Common CLO attributes help explain why.
“CLOs typically offer higher yields than comparably rated corporate bonds,” explains Wilches. “Plus, the high-quality tranches we focus on boast a default-free history, a period that includes the financial crisis.”
Misperceptions regarding CLOs are declining as new products, including the recently launched PGIM Global AAA CLO Fund, expand access from an institutional specialty to the retail market. Investors are increasingly looking to CLOs in 2025 because of how they stack up against other fixed income offerings.
CLOs vs traditional fixed income
This year, global AAA CLOs recorded a yield-to-worst of 5.1%. This is above the Global Aggregate Bonds, US Treasuries and Global Corporate sectors of 3.5%, 3.9% and 5.0%, respectively .
“This favours CLOs quite well because they don't have the idiosyncratic risk associated with traditional fixed income instruments,” he explains. “This creates a very robust cashflow for times where credit stress might pick up, and AAA and AA CLOs, in particular, can shield investors from some of those idiosyncratic risks that we're not sure about yet but we know will eventually come.”
AAA and AA CLOs, in particular, can shield investors from some of those idiosyncratic risks that we're not sure about yet but we know will come
CLOs offer attractive yield vs. other fixed income sectors
Global AAA CLOs yield-to-worst (“YTW”) is attractive relative to other fixed income sectors
Past performance is not a guarantee of future results. Source: PGIM using data from JP Morgan and Bloomberg as of 30/9/2025. All indexes are unmanaged. An investment cannot be made directly in an index. Global Agg Bond Index: BBG Global Aggregate Bond Index USD; US Treasuries: BBG U.S. Treasury Index; Global AAA CLOs: 50% JPM US CLOIE AAA / 50% EURO CLOIE AAA (USD Equivalent). Global Corporate: Bloomberg Global Aggregate Corporate Index USD. Global High Yield: ICE BofA Developed Markets High Yield Constrained Index USD Hedged.
Moreover, being independent of the broader bond market, CLOs offer unique attributes and, ultimately, provide enhanced diversification via low, at times negative, correlations with traditional fixed income investments. As pooled investment vehicles comprised of anywhere from 100 to over 200 individual loans, CLOs don't rely on repayment from a single borrower, like a bond does.
According to Wilches, high-quality CLOs boast a risk-return profile that can improve most fixed income allocations, with many investors employing CLOs in lieu of some short-term and/or investment grade exposure.
Among other key features, CLOs offer floating rate coupons, largely insulating them from the kind of rate risk that tends to accompany macro-driven rate uncertainty.
“In a shifting rate environment, AAA CLOs offer a timely opportunity: floating-rate exposure helps cushion against falling yields, while their short duration reduces interest rate risk,” he says.
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1
1. Source: PGIM using data from JP Morgan and Bloomberg as of 31/7/2025. All indexes are unmanaged. An investment cannot be made directly in an index. Global Agg Bond Index: BBG Global Aggregate Bond Index USD; US Treasuries: BBG U.S. Treasury Index; Global AAA CLOs: 50% JPM US CLOIE AAA / 50% EURO CLOIE AAA (USD Equivalent). Global Corporate: Bloomberg Global Aggregate Corporate Index USD. Global High Yield: ICE BofA Developed Markets High Yield Constrained Index USD Hedged.
Yields (%)
US Treasuries
Global Corporate
Global AAA CLOs
Global High Yield
Global Agg Bonds
3.5%
3.9%
5.0%
5.1%
6.4%
Learn more about the CLO opportunity at PGIM.com
STRATEGY SPOTLIGHT
DEMOCRATISING THE ASSET CLASS
Senior secured corporate loans represent the primary collateral in CLOs. The loans are pooled into a special purpose vehicle, which issues securities in tranches offering various levels of risk and return potential. Wilches points to this ability to build CLOs with bespoke mixes of assets and grades as a uniquely appealing feature of the asset class.
Allocating to attractive income and resilience
New products invite retail access to CLO investing
FUND SNAPSHOT
Everyday investors gain access to one of the best-kept secrets in institutional fixed income
exposure to current energy practices. Fossil fuels have become increasingly controversial holdings as a result, shunned by those who want to solely invest in the zero carbon sources like renewables.
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Investors are looking to increase yield, reduce risk and diversify their portfolios, so I don’t think this product could come out at a better time
“What gets us most excited about this fund is the ability to provide retail clients opportunities they haven’t been able to access in the past,” says Edwin Wilches, who co-leads the firm’s securitised products team.
The new fund builds on PGIM’s pre-existing $77 billion CLO platform, leveraging decades-long relationships and extensive teams of experts. As the name suggests, the PGIM Global AAA CLO Fund focuses on AAA-rated senior debt tranches of U.S. and European CLOs. Up to 20% of the fund can be invested in debt tranches rated AA .
The PGIM Global AAA CLO Fund
One of the defining characteristics of CLOs is that they typically offer higher yields than comparably rated corporate bonds. What is less appreciated is that they also tend to be risk-remote in the highest-quality categories, with no defaults in the AAA and AA tranches going back to the inception of the asset class in the late 1990s.
The CLO structure plays a major role in that resilience. CLOs consist of pools of senior secured corporate loans divided into securities issued in tranches with various risk-return profiles. Payments from the underlying loan pool go to the highest quality tranches first as part of a top-down “waterfall” hierarchy. That means the AAA tranche is the first to receive principal repayment and interest income, and the last in terms of absorbing losses.
We think AAA CLOs and AA CLOs are amongst the most attractive and cheapest assets across global fixed income markets
PGIM ranks among the world’s top 10 CLO managers and top 10 CLO issuers. With scale and reach established over many years, PGIM leverages resources and relationships that position it to play a notable role as the asset class expands. Wilches says experience gives PGIM an edge in an asset class known for complexity and wide performance dispersion among managers.
at the forefront of this trend after recently launching one of the first UCITS CLO funds with a global investment universe.
stimated at more than $1.4 trillion, the market for collateralised loan obligations, or CLOs, is poised for continued growth as new publicly traded securities broaden access. One of the biggest managers in the institutional space, PGIM is positioned
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While the CLO market offers a range of tranches offering various levels of risk and return potential, Wilches believes the highest-quality tranches offer outsized appeal. The new fund emphasises the AAA tranche to capitalise on opportunities that Wilches considers to be among “the most attractive assets across global fixed income markets.”
CLOs represent new territory for many investors, accentuating the importance of experience, resources and mission-specific expertise when selecting managers.
The new fund is overseen by three fund portfolio managers, with Connor Byrnes and Gabriel Rivera working alongside Wilches, who collectively draw upon extensive talent resources specific to CLOs. In addition to 11 investment professionals working across the securitised products portfolio management team, there are 20 dedicated to securitised products research. They enhance their capacity by leveraging insights from a broader team with analysts dedicated to everything from credit research to macroeconomics.
Underpinned by ample resources
Staff as of May 2025. Team members appear more than once if they cover more than one sector. European team members are employees of a PGIM affiliate who have been providing services to PGIM Limited, a UK subsidiary that is authorized and regulated by the Financial Conduct Authority.
“The global leveraged finance team looks deep into the underlying collateral of these deals, helping us develop views on different industries and parts of the market, while the issuance team is helping us understand what they're seeing from their investors and what we're seeing in terms of structures evolving,” Wilches says. “When you add it all up, we're talking about more than 100 people in our organisation that are somehow related to every single investment that we're making.”
Access to the CLO market is expanding at a time when credit spreads in traditional fixed income sectors remain tight despite deteriorating credit quality and ongoing economic uncertainty. With comparatively compelling potential for upside in the CLO space, the relative opportunity in the CLO space calls out for attention, according to Wilches.
Says Wilches, “Investors are looking to increase yield, reduce risk and diversify their portfolios, so I don’t think this product could come out at a better time.”
FUND PORTFOLIO MANAGERS
SECURITISED PRODUCTS PORTFOLIO MANAGEMENT (11)
SECURITISED PRODUCTS RESEARCH (20)
FIRM-WIDE RESOURCES
1. Source: PGIM Fixed Income, as of 30/6/2025. Assets are based on company estimates, holdings are subject to change (rounded). 2. Source: JP Morgan, as of 30/04/2025, #7 by market value exposure of CLO managers.
Regional ALLOCATION (%)
Connor Byrnes
Gabriel Rivera
Fund portfolio managers
Securitised products portfolio managemnt (11)
Manager experience is critical
“I think our firm is very unique in terms of our CLO investment capabilities,” he explains. “We’ve been an investor in this market for decades, and we’ve also been a CLO issuer since well before the Great Financial Crisis.”
As both a CLO investor and issuer, PGIM does not purchase any security it issues to client funds to avoid conflicts.
PGIM Securitised Product Team
CLOs: A growing $1.4T+ global market
U.S. Led, Fast-Growing EUR Share
CLO Capital Structure
Example Underlying Borrowers
Global CLO Market
$1.4 Trillion
Past performance is not a reliable indicator of future performance. Source: PGIM Fixed Income, as of 30 September 2025. Totals may not equal 100% due to rounding. Portfolio holdings may not represent current, future investments or all of the portfolio’s holdings.
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Past performance is not a guarantee of future results. Source: PGIM using data from JP Morgan and Bloomberg as of 31/7/2025. All indexes are unmanaged. An investment cannot be made directly in an index. Global Agg Bond Index: BBG Global Aggregate Bond Index USD; US Treasuries: BBG U.S. Treasury Index; Global AAA CLOs: 50% JPM US CLOIE AAA / 50% EURO CLOIE AAA (USD Equivalent). Global Corporate: Bloomberg Global Aggregate Corporate Index USD. Global High Yield: ICE BofA Developed Markets High Yield Constrained Index USD Hedged.
Market outlook
A compelling case for AAA CLOs
ATTRACTIVE YIELD
ENHANCED DIVERSIFICATION
GREATER STABILITY
No defaults in the AAA and AA tranches over the CLO market’s 30-plus year history
Source: PGIM. Illustrative capital structure of a below IG company. Source of defaults: Moody’s as of June 2025, 10-yr cumulative WR-unadjusted defaults by original rating from 1/1/93 to 31/12/24. Past performance is not a guarantee of future results.
PGIM's edge in navigating CLO markets
The PGIM Global AAA CLO Fund is an actively managed global fund that provides diversified exposure to U.S. and European investment-grade CLOs. Committed to the highest quality standards, the fund invests in AAA and AA-rated CLO tranches, which offer the most favourable liquidity and default profiles. Actively managed for enhanced yield, the fund targets stable income with low credit risk using a bottom-up, relative-value approach.
A CLO fund committed to quality
PGIM is a top-10 global CLO manager with deep credit expertise and integrated capabilities across public and private markets. As both investor and collateral manager, PGIM leverages scale, proprietary tools, and market insight to deliver resilient structures and high-quality income through better terms and strategic execution.
CLO collateral manager globally
TOP 10
Managing CLO tranches in client portfolios since 2009
CLO tranche investments across 100 unique CLO managers
1. Source: JP Morgan, as of 30/04/2025, #7 by market value exposure of CLO managers. 2. Source: PGIM internal data as of 30 June 2025.
Zero defaults
Exceptional resilience amid drawdowns
Duration, floating rate coupons and structural protections limit sensitivity to rate-driven downturns
Source: Bloomberg and JP Morgan, as of 30/09/25. 1 Earliest common inception date is 30/12/2011. All indexes are unmanaged. An investment cannot be made directly in an index. CLOs: JPM CLOIE Index, Global Agg Bond Index represented by: Bloomberg BBG Global Aggregate Bond Index; Global Treasuries represented by Bloomberg Global Treasury Index USD Hedged, Global Corporates by Bloomberg Global Corporate Investment Grade USD Hedged & AAA/AA sub-indices, Global High Yield by Bloomberg Global High Yield Index USD Hedged, AAA CLOs: JPM CLOIE AAA Index, AA CLOs: JPM CLOIE AA Index.
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1 / 2
Risk-adjusted outperformance
High-quality CLOs boast a history of better returns with less risk than aggregate bonds
Past performance does not guarantee future results. Source: PGIM using data from JP Morgan and Bloomberg as of 30/9/2025. Earliest common inception date is 30/12/2011. CLO: JPM CLOIE Index; AAA CLO: JPM CLOIE USD AAA Index; AA CLO: JPM CLOIE USD AA Index; Global Agg Bond Index: Bloomberg Global Aggregate Index USD Unhedged. All indexes are unmanaged. An investment cannot be made directly in an index. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment.
Low-to-negative correlations to broad market fixed income
A distinct return profile offers resilience across different market environments
Past performance does not guarantee future results. Source: PGIM using data from JP Morgan and Bloomberg as of 30/09/25. * Represents correlations since 30 Dec 2011, which is the inception of the JPM CLOIE USD AAA Index. Global Aggregate: BBG Global Aggregate Bond Index; US Treasuries: BBG US Treasury Index; and Global Corporates 1-3 Yr: BBG Global Aggregate Corporates 1-3 Yr Index. All indexes are unmanaged. An investment cannot be made directly in an index.
Higher yields and lower rate risk
Their distinct return profile offers resilience across different market regimes
Past performance is not a guarantee of future results. Source: PGIM using data from JP Morgan and Bloomberg as of 30/09/25. All indexes are unmanaged. An investment cannot be made directly in an index. Global AAA CLOs: 50% JPM US CLOIE AAA 50% EURO CLOIE AAA (USD Equivalent). Global Agg: Bloomberg Global Aggregate Index USD Unhedged. US Treasury: ICE BofAML US 3-Month Treasury Bill Index.
Higher yields than comparably rated corporate bonds
Yields underpin compelling risk-adjusted return potential versus traditional fixed income
Yield-to-Worst (%)
US 3M Treasury Bill Index
Global Agg Bond Index
Correlations vs AAA CLOS*
1.00
0.00
-1.00
Global Corporates 1-3 yr
Global Aggregate
0.44
0.27
-0.05
0.84
0.93
0.82
-0.10
AAA CLOs
CLOs
AA CLOs
Global Agg Bond index
CLO Collateral pool
Tranche
Historical Default
AAA
0.00%
AA
A
0.03%
BBB
0.85%
BB
2.81%
Equity
High-quality assests with low credit risk
Historic 12-month drawdown (2012 to 2014)
Global Treasury
Global Agg
Global Corporates
-5.0%
-10.8%
-16.6%
-12.1%
-17.1%
Global AAA Corporates
Global AA Corporates
-1.6%
-21.8%
-5.3%
CLO vs. Other Sectors
CLO Tranches vs. IG Corporate Bonds
AAA CLOs present a strong investment proposition, offering attractive yields, portfolio diversification advantages, and a proven record of zero historical defaults.
Dedicated securitised products investment teams working with 29 senior leverage finance credit analysts
15 Years
700+
30+
EFFICIENT ACCESS TO AN INSTITUTIONAL MARKET
A best-in-class approach to the $1.4 trillion global CLO market
ASSET CLASS INNOVATION
One of the first active UCITS funds to offer access to a truly global opportunity set
COMPELLING CREDIT CHARACTERISTICS
Stable income, low risk and strong structural protections
LONGSTANDING EXPERTISE
An experienced CLO manager able to source assets at scale
1. Source: PGIM, CLO market data as of 31 January 2025
Why CLOs belong in your portfolio
DEMOCRATISING CLO INVESTING
THE SMOOTHING ENGINE
Past performance is not a guarantee of future results. Source: PGIM using data from JP Morgan and Bloomberg as of 31/07/25. All indexes are unmanaged. An investment cannot be made directly in an index. Global AAA CLOs: 50% JPM US CLOIE AAA 50% EURO CLOIE AAA (USD Equivalent). Global Agg: Bloomberg Global Aggregate Index USD Unhedged. US Treasury: ICE BofAML US 3-Month Treasury Bill Index
Yield-to-Worst
5.6%
3.6%
6.4 years
Past performance is not a guarantee of future results. Source: PGIM using data from JP Morgan and Bloomberg as of 31/7/2025. Earliest common inception date is 30/12/2011. CLO: JPM CLOIE Index; AAA CLO: JPM CLOIE USD AAA Index; AA CLO: JPM CLOIE USD AA Index; Global Agg Bond Index: Bloomberg Global Aggregate Index USD Unhedged. All indexes are unmanaged. An investment cannot be made directly in an index. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment.
Sharpe Ratio
1 / 3
2 / 3
3 / 4
Source: Bloomberg and JP Morgan, as of 31/12/24. 1. Earliest common inception date is 30/12/2011. All indexes are unmanaged. An investment cannot be made directly in an index. CLOs: JPM CLOIE Index, Global Agg Bond Index represented by: Bloomberg BBG Global Aggregate Bond Index; Global Treasuries represented by Bloomberg Global Treasury Index, Global Corp by Bloomberg Global Corporate Investment Grade, High Yield by Bloomberg Global High Yield Index, AAA CLOs: JPM CLOIE AAA Index, AA CLOs: JPM CLOIE AA Index, A CLOs: JPM CLOIE A Index, BBB CLOs: JPM CLOIE BBB Index.
TOP 10 MANAGERS
6.6%
4.9%
4.6%
3.8%
3.7%
3.0%
A Global Strategy
50% allocation to growing EUR market
RatingS ALLOCATION (%)
~15% AA for yield enhancement
Highest Credit Quality
4.96%
Yield-to-Worst (gross)
5.14%
Yield-to-Maturity (gross)
100% Investment Grade
0.16 Years
Duration
Past performance is not a reliable indicator of future performance. Source: PGIM Fixed Income, as of 31 August 2025. Totals may not equal 100% due to rounding. Portfolio holdings may not represent current, future investments or all of the portfolio’s holdings
46% allocation to growing EUR market
“Rather than replacing core bond allocations, AAA CLOs can complement them, adding efficiency and diversification to a well-balanced portfolio,” says PGIM’s Edwin Wilches. Allocating 10%-30% of an aggregate bond portfolio to AAA CLOs has historically improved risk-adjusted returns, especially during periods of market stress or rate uncertainty.”
CLOs mitigate two primary risks in fixed income: Interest-rate risk and credit risk. CLOs carry very low duration, with floating-rate coupons that adjust in line with changes in short-term interest rates. Their low duration shields them from interest rate shifts that can trigger significant drawdowns in rate-sensitive sectors like US Treasuries. Positioned at the top of the capital stack, AAA CLOs benefit from strong credit enhancement and minimal exposure to credit risk.
Risk reducing features
PGIM Global AAA CLO Fund Highlights
PGIM Global AAA CLO Fund highlights
Sharpe ratio
