CLOs are now a mainstream asset class offering spread enhancement, diversification, and double-digit returns powered by active management. Key Takeaways: CLOs may offer allocators spread enhancement and diversification across every level of the capital structure, from senior investment grade to equity. Active manager selection is critical in CLOs. Portfolios that start similar can diverge widely based on the manager’s decision making. CLOs may offer built-in mitigation from single-name risk through diversification across hundreds of underlying loans, a meaningful advantage over concentrated corporate bond exposures.