Item 5 – Fees and Compensation
A. Describe how you are compensated for your advisory services. Provide your fee schedule.
Disclose whether the fees are negotiable.
BMCLO is compensated for its advisory services generally through a management fee charged to the
CLOs. Such management fee is typically made up of two components (i.e., a “Senior Investment
Management Fee” of 0.15% (or 0.20%) as well as a “Subordinated Investment Management Fee” of
0.35% (or 0.30%), in each case, of the net assets3 of the CLO, per annum), which fee is typically payable
quarterly in arrears (i.e., 1/4 of the aggregate annual management fee of 0.50% of the net assets of each
CLO becomes payable to BMCLO following the end of each calendar quarter); however, the management
fee structure and terms may vary among different CLOs. Pooled investment vehicles and other accounts
that are managed by AssuredIM (“AssuredIM Clients”) may invest in the CLOs. To the extent that an
AssuredIM Client’s CLO investment is subject to such management fees (described above) or
performance-based fees (described below), the amount of such fees paid to BMCLO are subject to rebate
or offset by AssuredIM in favor of such AssuredIM Client.
Additionally, BMCLO has entered into a services agreement and a secondment agreement with
AssuredIM pursuant to which AssuredIM provides certain services associated with the management of
CLOs, including access to its full team of research analysts and portfolio managers employed by
AssuredIM, office space, back office services such as loan settlement, legal and compliance services, and
performance of trade executions upon instruction from AssuredIM. Such services also include services
provided through one or more of AssuredIM’s affiliates. By way of compensation for these services,
AssuredIM receives a services fee from BMCLO.
In addition, performance compensation is payable to BMCLO on a quarterly basis with respect to each
CLO, typically 20% of excess cash flow available after paying liability costs and expenses once a pre-
determined hurdle return has been realized; however, the performance compensation structure and terms
may vary among different CLOs. See Item 6 for further information with respect to performance
compensation.
BMCLO reserves the right to waive or reimburse some or all fees for certain investors in CLOs. As
explained above in Item 4, BMCLO enters into Side Letters with certain CLO investors, whereby such
investors are granted favorable rights not granted to other investors in the CLO including, among other
things, rights to receive reduced rates of, or reimbursement of, performance compensation and/or
management fees earned by BMCLO.
Other fees payable by investors in CLOs are described below.
CLO investors and prospective investors in CLOs should refer to the offering circular or other offering
documents of the respective CLO for detailed information with respect to the fees associated with such
CLO. The information contained herein is intended as a summary of such offering documents and is
qualified in its entirety by such documents.
The net assets of a CLO generally include the aggregate value of the CLO’s collateral plus available cash. The
management fee is typically paid from interest revenue, which is segregated from other CLO cash at the time of
such management fee payment.
B. Describe whether you deduct fees from clients’ assets or bill clients for fees incurred. If clients
may select either method, disclose this fact. Explain how often you bill clients or deduct your fees.
Management fees and performance compensation are generally remitted by the independent trustees of
the CLOs on behalf of the respective CLOs to BMCLO pursuant to the terms of the applicable indenture
and investment management agreement between the parties.
Management fees and performance compensation may be (and have been) waived or modified in the sole
discretion of BMCLO and/or its affiliates.
CLO investors and prospective investors in CLOs should refer to the offering circular or other offering
documents of the respective CLO for detailed information with respect to how fees are paid with respect
to their assets. The information contained herein is intended as a summary of such offering documents
and is qualified in its entirety by such documents.
C. Describe any other types of fees or expenses clients may pay in connection with your advisory
services, such as custodian fees or mutual fund expenses. Disclose that clients will incur brokerage
and other transaction costs, and direct clients to the section(s) of your brochure that discuss
brokerage.
BMCLO’s fees are exclusive of the CLOs’ own organizational (which may be amortized over a period of
time, as set forth in the offering documents of each applicable CLO), operating and other expenses
including (without limitation): (i) investment related expenses (including without limitation, interest
expenses, hedging expenses and costs associated with identifying, evaluating, valuing, structuring,
monitoring, holding, purchasing, selling, warehousing investments and potential investments (whether or
not completed)), (ii) audit expenses, (iii) trustee, rating agency and administration fees and expenses, (iv)
legal and accounting expenses, (v) expenses related to research services and data feeds, (vi) insurance and
director fees and (vii) taxes.
Execution of CLO transactions typically requires payment of a bid/ask spread or brokerage commissions
by the CLO. Item 12 below describes the factors that BMCLO considers in selecting or recommending
broker-dealers for the execution of transactions and determining the reasonableness of their compensation
(e.g., commissions). Investment activity also involves other transaction fees payable by CLOs, such as
sales charges, odd-lot differentials, transfer taxes, wire transfer and electronic fund fees, and other fees
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