The Eldridge BBB-B CLO ETF delivers elevated yields by holding mezzanine CLO tranches tied to short-term rates.
The Eldridge BBB-B CLO ETF (CLOZ) has returned 11% annualized since 2023, leveraging floating-rate mezzanine collateralized loan obligation tranches. Its 7% yield resets with short-term rates, currently at 3.75% since December 11, 2025, aligning with the Fed’s ‘higher for longer’ stance.
Unlike AAA-rated alternatives such as JAAA, CLOZ targets BBB+ to B- tranches, offering higher yields but greater sensitivity to credit events. Monthly distributions have already fallen from $0.22 to $0.17 per share due to recent rate cuts, with further reductions expected as the Fed eases policy.
Institutional investors favor this segment for its yield premium over AAA tranches, though it carries more risk than top-rated debt. The fund’s structure benefits from elevated short-term rates but faces headwinds if rates decline sharply.