Earlier today fabrib posted that some of the big money managers are now looking at launching CLO ETFs. Of course there are already a couple out there that concentrate on the more quality tranches of CLOs. This link should access the article.
Janus has the Janus AAA CLO ETF and the Janus B-BBB CLO ETF.
Anyway while poking around looking for information on CLO ETFs I came across Barrons article on CLOs–this is from April. An interesting read.
This information is just posted for all to access some information on this asset class which is misunderstood many times. It should be noted that when the big money moves into an area it makes me a bit nervous.
Note I don’t own and will never own a common share of a CLO company—I’m sticking to the ‘senior securities’–that is my risk tolerance.
Tim, Thanks for posting the Barron’s article. Make’s you wonder. Someone posted earlier today or was it yesterday. If a few people like Michael Burry who saw the problem with CMO’s might see the next big market event and what would it be?
CLO’s and now CLO ETF’s being bundled together and being called safe investments that have never had a major default are going to give me nightmares tonight in my sleep. Black swan? sleep well at night? As my wife says cue the music.
https://www.youtube.com/watch?v=GfQu5po6USo#:~:text=John%20Williams%20composed%20the%20film's,%22F%20and%20F%20sharp%22%E2%80%94
Just my two cents: I own a handful of these CLO ETFs. If they all went away I certainly wouldn’t be happy, but I don’t own enough to keep me up at night. When I think of these ETFs, they do provide portfolio management, diversification, and liquidity. Can’t say that for my individual preferred and bond holdings. As a matter of fact, during market stress individual holdings can get cut in half in the blink of any eye. Yes, that can present some great opportunities, but I’ve been through enough meltdowns and don’t need any more.
After the GFC, if there are games being played by the rating agencies with these CLOs, I think this time someone would definitely go to prison. Let’s hope we don’t have to find out.
own JBBB and consider it a core holding; i’m expecting the yield to mitigate along with the Fed interest decreases,
I thought it might be useful to add this one: Invesco CEF Income Composite (PCEF) at 19.65$ with annual div 8.20%, 0.13 paid monthly around 20th.
I can’t see rationale for this one ; it has double layer of fees; the fee for the ETF plus the fees for the listed companies it holds ;?
Plus PCEF doesn’t seem to have anything to be CLO related fund as far as I can see….. Yields quoted are always after the fees have been paid.