CLO Equity Funds Had a Brutal Month — Dividend Coverage Strong & Profitability Metrics Strong (due to the beaten-down stock prices)

CLO Equity Funds Score Card - June 24, 2026

CLOInvestor.com ·

Thanks to my new intern, Ryan Carnicelli, a rising junior Business Major at Indiana University, for his help pulling this information together. See his bio on the website.

• CLO equity fund stocks performed terribly over the last 30 days — on average these funds are down 13%, with OCCI leading the pack at a negative 26% stock return. EIC is the outlier, down only 50bps.

  
  

• Underlying leveraged loan performance and CLO equity valuations seem to have stabilized, at least for now — average NAVs are up 6% from Q1 2026.

  
  

• NII is still under pressure, with most CLO equity funds reporting significant drops in Q1 2026 NII from Q4 2025 (EIC is the outlier with a 3% increase). Note XFLT hasn't published Q1 2026 figures yet.

  
  

• I believe there may be a fundamental shift in the power structure between leveraged loan issuers and CLO investors. Due to strong demand for CLO debt and a dearth of new-issue loans, CLOs are now willing to buy loans with low spreads that meaningfully change the expected IRRs on CLO equity. Historically CLO equity demanded an expected 12%–15% IRR; now deals are being done at 8%–12%. This may be caused by the growth of captive CLO equity funds.

  
  

• Even if the above is true, I believe leveraged loan spreads have hit a bottom and CLO debt spreads have some room to fall, which should help net CLO interest spreads.

  
  

• I think CLO net interest spreads have more or less hit a bottom but I don't expect a recovery any time soon. However, with CLO equity fund stocks beaten down so much, their profit metrics are at historically high levels, as is their stock coverage.

  
  

• Due to the excessive risk and fair-value volatility of CLO equity and the corresponding stock prices of these funds, I do not believe these funds are appropriate for buy-and-hold income investors.

  
  

• However, for the investor who wants to add non-AI or non-Tech risk to their portfolio, these funds are an interesting contrarian value play with potential significant upside and a strong, steady income stream.

Over the next week I plan to publish detailed reports on the CLO Equity Funds financial metrics including profitability, NAV histories, credit losses, and portfolio analysis. Please watch my site for updates.

ALSO - PLEASE LEAVE COMMENTS OR QUESTIONS!!!!