JAAA: AAA CLOs - Best Risk/Reward In The Income Space

Jul. 17, 2023 11:48 AM ETJanus Henderson AAA CLO ETF (JAAA)JAAA6 Comments

Summary

  • AAA CLO securities have minimal credit and duration risk and boast yields north of 7%, offering excellent risk/reward in our view.
  • We highlight a number of second-order risks and how these securities compare to investment-grade bonds.
  • We also highlight a couple of funds that allocate to AAA CLO tranches.
  • Systematic Income members get exclusive access to our real-world portfolio. See all our investments here »

Risk reward ratio / risk management concept : Risk and reward bags on a basic balance scale in equal position, depicts investors use a risk reward ratio to compare the expected return of an investment

William_Potter

This article was first released to Systematic Income subscribers and free trials on July 5.

In this article, we take another look at AAA CLOs. The discussion is motivated by an interesting question we got on the service of how to

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This article was written by

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ADS Analytics is a team of analysts with experience in research and trading departments at several industry-leading global investment banks. They focus on generating income ideas from a range of security types including: CEFs, ETFs and mutual funds, BDCs as well as individual preferred stocks and baby bonds.

ADS Analytics runs the investing group Systematic Income which features 3 different portfolios for a range of yield targets as well interactive tools for investors, daily updates and a vibrant community.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of JAAA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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