what is the difference between a clo and a collateralized mortgage obligation cmo 
clos are similar to collateralized mortgage obligations cmos in that both securities are based on a large portfolio of underlying debt instruments the main difference between them however is that clos are based on debts owed by corporations whereas cmos are based on mortgage loans both clos and cmos are examples of credit derivatives the bottom linea clo or collateralized loan obligation is a debt security backed by a pool of debt investors can choose one of several debt tranches to put their money into with higher risk tranches providing higher returns although yields may be higher than average investors also assume the risk of borrower defaults this article is not intended to provide investment advice investing in securities entails varying degrees of risk and can result in partial or total loss of principal the trading strategies discussed in this article are complex and should not be undertaken by novice investors readers seeking to engage in such trading strategies should seek out extensive education on the topic 