Compensation at CLO funds
Does anyone know how a first year analyst at a CLO shop might be compensated relative to other analysts in the industry?
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This is old as shit but I am gonna bump it instead of asking the same question...
Compensation at CLO funds/managers
Im speaking about pure CLO shops:
It is not like that at all. CLOs are more actively managed than most other forms of CDOs/ABS. As a point of clarification, Wing Chau was managing (mostly non-agency) RMBS, where the underlying securities of the ABS were mortgage bonds that are basically already "securitized" packages of whole loans to residential properties; this type of securitization (along with some other huge-line-item, consumer-finance flavors of ABS) are among the most hands-off in terms of collateral management duties, even if you're doing a "good" job of it.
I would equate CLOs to a levered, closed-end mutual fund insofar as the collateral manager has the discretion to actively buy and sell underlying assets, and the underlying assets are mid-sized or larger corporate issuers with audited financials, quoted prices on their debt, etc. In fact in some rate/credit/capital markets environments a typical CLO might actually have more turnover in its portfolio than a generic high-yield bond mutual fund, because loans prepay and issuers churn more regularly.
Also, while I would agree with Cries that you don't NEED to do a lot of high-quality credit picking to make a CLO work (and that many CLO managers are not adding much value), there's some pretty convincing sell-side research on performance by manager cohorts in CLO equity.
Ditto on what Kenny said.
Im a huge believer in well-managed CLOs. But fact of the matter is, many managers do the print&sprint thing, and just fill the book with the most diversified basket of loans possible regardless of price or fundamentals. Many managers in this credit environment will put in for any loan that banks are willing to underwrite/syndicate. These are the Wings of the CLO market. They exist, and they are everywhere today.
Okay what about a CLO Manager with between $2 and $5 bn spread across 6-10 CLOs?
100k base? What kind of bonus?
Depends on the role. Would say the following 1st Year Analyst - $70k/$30k 2nd Year Analyst - $75k/$30k 3rd Year Analyst - $85k/$45k
After that - it can ramp significantly dependent on AUM of the shop. Top shops pay incredible higher than you would think. See the CLO Asset Manager thread, its super helpful. Smaller shops ~$2-5bln will pay less, but your experience will still be great if you are underwriting deals. The volume of deals you see and the types of transactions bode well when looking to jump. We have had a few people exit to Credit HF (albeit VERY rare), Syndicated loan jobs at BB/Upper MM Firm, LevFin at a Bank or MM Private Credit (probably most common at the 3-4 year level as you can lateral to an associate job at some shops).
Dunno. Maybe 20%? I wouldnt expect much more than that, because its Asset Management type work.
Also, for base, I would be expecting anywhere between 70-100k.
You can bucket the types of places that manage CLOs into a few different categories imo:
1) Large CLO platforms affiliated with large, primarily institutional/traditional asset managers (Invesco, ING, Prudential, etc) 2) CLO platforms affiliated with large PE shops (Carlyle, BX/GSO, Apollo, etc) 3) Hedge fung managers who have a CLO business-generally credit-focused funds; sometimes this is a small/opportunistic platform vs the overall size of the manager, others use this as a core part of the strategy (Angelo Gordon, Goldentree, Oak Hill, etc). There is some gray area/slippage between #2 and #3 especially as large PE managers cross-pollinate into credit and vice versa. 4) "CLO-First" managers-shops that are effectively built around their CLO platform. Most managers I'm familiar with have at least some kind of other product on the side (managed accounts/loan mutual funds, credit HFs, distressed, CLO equity fund, etc). These range in size from tiny post-crisis launches to huge market players like CIFC.
Generally categories #1 and #4 are going to pay along the lines of most non-alternatives managers (I think Cries is directionally right though there's potential for larger bonuses, and there'll be some variability based on size, scale, etc). Categories #2 and #3 are harder to peg and will depend in part on whether the CLO management team is silo'd off from other credit desks.
Bumping this thread, any opinion on the comp for someone with a couple more years of experience at a CLO? What are the exit opps for this type of role compared to an equity research type of role?
An analyst at a CLO shop covers credit.. which is fundamentally different from covering equity in equity research. You will cover bank loans at a minimum, and potentially bonds as well. So anything corporate credit related could be exit possibilities - credit mutual funds, other CLO shops, credit long only, credit l/s, etc. If you were an analyst covering sectors with more workouts (oil and gas, retail, etc) then distressed funds are an option as well.
Bumping thread. Any idea on CLO compensation for roles w/ 2-3 years work experience? Any rough guidance is much appreciated.
With 2-3 years experience you will likely come in at the Associate level. Assuming that you're at a top 20 CLO shop by AUM, comp would be in the 100k base ballpark and bonus 25-100% depending on individual/team/firm performance. If you're at a smaller CLO shop then lower.. how much lower really depends.
What are the exit ops for a CLO analyst? It seems like the skills set of a CLO analyst does not quite match other buyside opportunities?
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