CLOZ delivers 10% annualized returns at 0.50% fee, surpassing JAAA’s 5% yield at 0.20% in BBB-B tranches.
The Eldridge BBB-B CLO ETF (CLOZ) charges a 0.50% management fee but delivers 7% yield and 10% annualized returns, outperforming the Janus Henderson AAA CLO ETF (JAAA), which yields 5% at a 0.20% fee. Active management in lower-rated tranches drives higher returns, while AAA paper shows minimal benefit from fee premiums.
Collateralized loan obligation ETFs have surged in fixed income, offering floating-rate coupons, low default rates, and yields above investment-grade corporates. However, CLO tranches lack standardization, making manager selection critical. The Fed’s 3.75% target rate, held since September 2025, has compressed floating-rate coupons, increasing the importance of capital structure positioning.
Competing funds like JBBB, CLOA, and CLOX occupy different rating tiers, each addressing the active-passive debate with varying fee structures. The performance gap raises questions about whether higher fees justify the outperformance in riskier tranches.