Animal Spirits Podcast

Talk Your Book: Investing in Securitization

14 snips
May 11, 2026
Guest
Mike Laughlin
Mike Laughlin, Executive Director at Janus Henderson who specializes in securitized products and CLO-related ETFs. He unpacks how CLOs work, why AAA tranches attracted investors, and the ETF mechanics that open a $1.1T market. Conversations touch on floating-rate, short-duration income, risk drivers like spread widening and liquidity, and broader securitized opportunities such as ABS and home equity loans.
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ADVICE

Use AAA CLOs As Cash Alternatives

  • Use AAA CLOs as alternatives to ultra-short or cash-like allocations to earn higher yield without duration risk.
  • Mike suggests advisors move cash or ultra-short bond allocations into JAAA for yield and stability.
INSIGHT

CLOs Behave Like Short Duration Floating Rate Bonds

  • CLOs act like ultra-short, floating-rate instruments with legal lives of 11–13 years but typical realized deal lives of 7–8 years.
  • Yields reset quarterly, so CLOs have little interest-rate duration despite long legal maturities.
INSIGHT

What A CLO Actually Is

  • A CLO is a collateralized loan obligation formed by securitizing a pool of broadly syndicated senior secured bank loans into rated tranches.
  • The CLO stack includes AAA down to equity tranches; JAAA buys the AAA tranche backed by hundreds of loans.
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