With over $7 trillion still sitting in U.S. money market funds, many investors remain hesitant to re-enter markets amid macro uncertainty. But, as central banks begin to pivot and potential rate cuts loom on the horizon, the opportunity cost of staying sidelined is rising. For investors seeking to re-engage without taking on excessive risk, AAA-rated Collateralised Loan Obligations (CLOs) present a compelling alternative.
These high-quality, floating-rate instruments provide a yield advantage over traditional fixed income sectors, demonstrating stronger cumulative growth than both T-Bills and global aggregate bonds. Their resilient structure also supports lower volatility, delivering more consistent daily gains. And by strategically adding a portion of AAA CLOs, portfolios have been shown to benefit from more attractive risk-adjusted returns – delivering efficient potential compensation for modest incremental risk.
Explore the analysis or read our Manager Perspectives Q&A to learn how AAA CLOs can help strengthen your income strategy.
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