9% Yield Without the Rollercoaster? CLOZ ETF Explained

CLO's are known for their high yields, but their complexity often intimidates investors. In today’s episode, we're diving into my second CLO-focused investment: CLOZ. Offering low volatility and a 9% yield (as of recording), this ETF from Panagram is an intriguing option for income investors. I’ll break down how CLOs work, why CLOZ stands out, and the pros and cons of adding it to your portfolio. If you’re interested in high-yield dividend investing, this one’s for you!

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(Start listening at 28:27 to skip the first interview)
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Timestamps:
00:00 Introduction
01:12 Distribution History for CLOZ
02:17 What is CLOZ?
03:48 How do CLO's work?
05:23 Pros for CLOZ
08:21 Cons for CLOZ
12:29 Pricing
12:42 My Take
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[armchairincomechannel]

➡Snowball Dividend Tracker (Create a Free Account, and the 10% Discount will appear under "Subscribe"):

[kevmed]

Awesome overview of CLO tranches and how and where EIC, ECC, and JBBB play in this. That risk tranche graphic with the ETF overlays, is the best visualization I've seen. Not sure what your pre-retirement gigs were, but you are clearly an excellent educator!

[dixieking]

I'm an institutional investment manager that has been buying CLOs for several years. Glad they now are offered where individual investors can purchase easily though the recent popularity has tightened spreads. I like JBBB and have owned it for a while. Great consistent income. I probably would pull money out if the fed funds rate dropped below 3% which isn't likely soon.

[Income_Architect]

Great video. Thanks. I did a video on CLOZ and I am currently building this one out. Living on my distributions like you. Have a great day.

[williamtaylor]

Lots of interest here in a well-done presentation. Good discussion of the difference between ETF and CEF vehicles to access this asset class, but a BIG additional difference is that CEFs use leverage. That's why CLOZ pays 9% and EIC pays about 15%, with much the same assets. Leverage is usually a good thing with high spread assets like CLO equity and junior debt. The highest yielding vehicles are CLO equity CEFs like ECC, OXLC, OICC, all yielding 18-20%.

[ClintonSiegel]

Great deep dive - as always I love the graphics and illustrations. On this Thanksgiving I am giving thanks for this channel and all the invaluable information it provides.

[williams]

Amazing video. Going to that financial statement and talking through it was extremely helpful!!

[txbgould]

Thanks for drawing attention to funds that might not make in my radar otherwise. I always learn something from your content.

[mrallan]

This is a much better explanation of of collaterized loan/debt (a loan is by definition a type of debt). Thank you. I think a big aspect beyond just the debt rating (which is very important) is the underlying business & assets. While this should be factored into the debt ratings, there is a lag in when debt is re-classed (and it's almost always a downgrade). A debt can be rated highly due to current and future prospects, but that can change before it reaches maturity. Sometimes it can take months, quarter, or even longer before it's announced. Diversification is good, so a broad mix of investments is wise. I personally like the etf with preferred shares of most utility companies that is slightly leveraged as a bond-like/fixed incomesque holding.

[RMROTONDO]

First time here. Refreshing delivery and great info!

[sdrsa]

Excellent Summary! CLOZ one of my favorites.

[mikeconnell]

Thanks for the video. I've been impressed with CLOZ. Its now one of my biggest holdings.

[momdittomomditto]

My Sunday go-to channel! Always happy to watch and learn while listening to your charming accent. I own iclo and jaaa. Will keep an eye on cloz.

[davidwysocki]

Thanks, Armchair, for an interesting presentation on CLOZ. I have never really considered a CLO-focused fund but dig deeper into CLOZ, JAAA and JBBB after watching your video presentation.

[billibarou]

You did a great job reviewing this fund and making it easy to understand. Thank you.

[Lawyerup]

Continuing to build my income factory and these definitely look like candidates for further evaluation. As always, thanks for the video!

[surelywoo]

Good breakdown. I'm on a similar journey and everything you said agrees with what I have learned. I bought ECC earlier, which has a good yield but significant capital erosion. Thanks for making me aware of CLOZ.

[robertrice]

Thanks for all the analysis and alternative ideas. I appreciate the transparency as well. Keep up the great product and effort. 👍

[marshallmason]

I was about to comment with my risk concerns, but you covered it! Only thing I'd point out, then, is that JAAA's yield is only slightly higher than SGOV at the moment, making it barely worth the risk. But long term, its yield has been much higher. So maybe it's more worth the risk in a low rate environment.

[LanceSoFast]

Hello. I have been investing in CLOZ for the past few months. No selling, just buy and hold. I’ve been very impressed with the capital preservation so far no erosion. I’ve also noticed that it doesn’t fall off the cliff at the end of the month like some CLO funds do. I’m sure there will be some volatility going forward. Also, the fund manager resigned, and he was replaced by someone new. From what I understand, the new team has experience. I guess we will find out.