Panagram BBB-B CLO ETF (CLOZ)
ARCA ARCA Primary 
CLOZ Vs. USHY: Which Is Best For Income Investors And Retirees?
CLOs have been one of the best-performing income asset classes of these past few years, as has CLOZ. Due to the fund's strong investment thesis and popularity, I thought to compare it with USHY, a simple high-yield bond ETF. CLOZ has a higher yield, stronger past returns, and lower risk and volatility.
CLOZ: You May Not Want To Buy BB CLO Tranches At Current Spreads
CLOZ offers exposure to BB and BBB CLO tranches, blending investment-grade and high-yield risk for a 7.7% SEC yield and floating rate income. Current CLO spreads are historically tight, making the risk/reward unattractive; a significant drawdown is possible if spreads widen to past levels. Recent management changes add uncertainty, as the fund lost an experienced manager, and new leadership's performance in stressed markets is unproven.
Advisors Plan to Take on Credit — Not Duration — Risk
Advisors don't want to take on much interest rate risk. But many are willing to take on some credit risk.
CLOZ: Better Income Than A Money Market Account And Less Volatile Than Stocks
The fund's strategy focuses on generating consistent income from CLO debt investments rated at a BBB and BB. The outlook for the fund remains positive, supported by strong market fundamentals and effective management strategies. The portfolio is highly diverse and NAV growth has been positive. Although there are risks related to CLOs, CLOZ focuses on higher rated debt investments.
CLOZ: A Good Pick For Higher-Risk CLO Exposure
The Eldridge BBB-B CLO ETF offers liquid access to illiquid collateralised loan obligations, focusing on BBB-to-BBB rated tranches with variable-rate structures. The ETF maintains a significant 8% cash position, allowing strategic allocations and a capital buffer. Additionally, CLOZ is well-diversified across sectors and issuers, mitigating idiosyncratic risk. CLOZ seems more risky than its peer set. However, its returns can be compelling as a consequence.
CLOZ: BBB-B CLOs Are Paying Me Handsomely
CLOs are currently my favorite debt vehicles due to high yields linked to elevated short-term rates. Eldridge BBB-B CLO ETF offers an 8.78% TTM yield, with low sensitivity to rate changes, making it a stable investment. CLOZ is heavy on lower-rated CLOs, giving it a very high yield, but quality holdings actively selected by management help mitigate some risks.
CLOZ: Strong Fundamentals With High Income
I am bullish on CLOZ due to its high returns, low risk, and low volatility. CLOZ invests in a diversified portfolio of CLOs, offering a mix of low-risk BBB tranches and higher-return BB tranches with low default rates. CLOZ's holdings are well-distributed across sectors, with a 30-Day SEC Yield of 9.42% and a management fee of 0.5%.
CLOZ: Strong CLO ETF, 7-7.5% Forward Yield, Outstanding Performance Track-Record
CLOZ invests in BBB-BB CLOs. It significantly outperformed most of its peers during 2024, despite several rate cuts. It boasts an 8.8% yield, which should decline to around 7.3%, depending on the magnitude of any remaining cuts.
CLOZ: Collecting A Higher Yield With Less Risk
Panagram's Bbb-B Clo ETF offers a high yield through BBB and BB-rated debt, aiming for capital preservation and high current income with a 9% dividend yield. CLOZ's net investment income comfortably covers distributions by itself, without relying on net realized gains. There is no risk of a dividend cut at the moment. The main risk is borrower defaults, influenced by interest rates; however, historical default rates for CLOs have been low, even during financial crises.
CLO Debt ETFs Or CLO Equity CEFs: Which Are Best For Income Investors And Retirees
CLOs have several tranches. Equity tranches are the riskiest ones, but also have the highest yields, and strongest potential returns. Debt tranches are safer and lower-yielding, some significantly so, some moderately so.
CLOs In The Current Market Selloff
Equities are down, due to bearish sentiment, mediocre economic news, and the unwinding of the Japanese carry trade. High-yield bonds and senior loans are seeing some pain too, albeit much reduced. CLO ETFs keep chugging along, without significant losses or underperformance.
CLOZ: 4 Reasons Why I Am Bullish
Panagram BBB-B CLO ETF invests in below investment grade CLOs with a focus on BBB-B ratings for high-income and capital preservation. CLOZ is a unique product offering that has significant exposure to BB rated CLOs. BBB and BB rated CLOs are currently attractive relative to similar risk corporate securities.
