CLOZ: Best-Performing CLO ETF, Above-Average Yield, Improving Market Environment
With Fed rates stabilizing, and the market turning hawkish, variable rate investments deserve another look. The Eldridge BBB-B CLO ETF (CLOZ) focuses on variable rate BBB-BB CLOs. It sports an above-average 7.0% dividend yield, and has outperformed most bonds on an absolute and risk-adjusted basis.
Eldridge BBB-B CLO ETF $CLOZ Shares Bought by Farther Finance Advisors LLC
Farther Finance Advisors LLC lifted its position in shares of Eldridge BBB-B CLO ETF (NYSEARCA:CLOZ) by 271.0% in the fourth quarter, according to the company in its most recent disclosure with the Securities and Exchange Commission (SEC). The institutional investor owned 37,842 shares of the company's stock after buying an additional 27,641
CLOZ: Price Decline Presents An Opportunity
Eldridge BBB-B CLO ETF offers an 8% yield, but recent price declines reflect tighter credit spreads and market volatility. CLOZ's income relies on elevated interest rates; falling rates in 2026 could pressure distributions and necessitate payout cuts. The portfolio is diversified, with 62.6% in CLO BBB tranches and significant exposure to high-tech, banking, and healthcare sectors.
CLOZ And The Real Risk Of BBB Tranches
CLOZ is an ETF that works with BBB CLO tranches, high yielding. Together with JBBB, it has become a very popular solution with spread tightening: stable prices and higher yields than AAA tranches. But CLOZ has a higher spread duration than solutions based on AAA tranches; therefore, greater risk of contraction in case of spread widening.
3 Of The Best CLO ETFs: Good Returns, Great Yields, And Below-Average Risk
CLO ETFs have higher yields, lower risk and volatility, than most other types of fixed-income ETFs. Performance has been exceedingly strong for years, albeit a bit weaker since the Fed cut rates last year. There are CLO ETFs with different risk-return profiles, some appropriate for more risk-averse investors, some for more aggressive ones.
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%.
