CLOZ: A Good Pick For Higher-Risk CLO Exposure

Mar. 23, 2025 12:24 PM ETEldridge BBB-B CLO ETF (CLOZ)CLOZ4 Comments
(8min)

Summary

  • The Eldridge BBB-B CLO ETF offers liquid access to illiquid collateralised loan obligations, focusing on BBB-to-BBB rated tranches with variable-rate structures.
  • The ETF maintains a significant 8% cash position, allowing strategic allocations and a capital buffer. Additionally, CLOZ is well-diversified across sectors and issuers, mitigating idiosyncratic risk.
  • CLOZ seems more risky than its peer set. However, its returns can be compelling as a consequence.
  • Leveraged loan liquidity remains solid, spread widening is possible amid higher loan defaults. Nevertheless, we don't see an outlying scenario occurring.
  • We rate CLOZ as a soft 'Buy' to those seeking credit exposure.

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yalcinsonat1

Collateralised Loan Obligation vehicles are a hot topic of discussion at the moment, and therefore, we decided to share our view on the Eldridge BBB-B CLO ETF (NYSEARCA:CLOZ). We've covered numerous AAA CLOs on Seeking Alpha. However, we

This article was written by

Methodology: Pricing Systematic Risk and Exploring Bottom-Up Fundamentals.Primary Assets Covered: DM Ordinary Shares, Preferred Shares, Bonds, REITs, and Investment Funds. Primary Sectors: Financials and Real Estate with an occasional drift.Kindly note that our published content is dispensed as Independent Analysis and Doesn't Constitute Financial Advice.

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