Panagram Structured Asset Management announced the launch of its second ETF: the Panagram AAA CLO ETF (NYSE Arca: CLOX). CLOX prioritizes capital preservation by investing in AAA-rated collateralized loan obligations (CLOs).
The corporate credit market has a long, robust historical track record. In over 25 years, the sector has seen no AAA-rated bond defaults. AAA-rated CLOs have a first priority on the interest and principal from underlying pools of senior secured loans.
CLOX provides access to a diverse pool of AAA-rated CLO bonds, which can offer higher yields than other similarly rated investments. Additionally, AAA-rated CLO bonds are less correlated to traditional stocks and bonds than other credit assets.
Panagram believes the CLO structure provides the best exposure to the $1.4 trillion senior secured loan market. Traditionally, CLOs have been an institutional-only asset. But now, investors can gain access to the asset class in the ETF wrapper.
See more: “Panagram Launches Actively Managed CLO ETF”
Requiring Active Management to Perform
CLO bonds’ complex and specialized nature requires active management expertise and scale to perform. Panagram is an investment specialist in this space, managing a large portfolio of CLO bonds. Panagram’s relationships within the institutional CLO market can position CLOX for preferential asset access.
Panagram’s CEO John Kim will serve as portfolio manager for CLOX. Kim said, “the launch of CLOX reflects our commitment to providing investors with attractive investment opportunities.”
“CLOX is designed to be a capital preservation vehicle, offering investors the potential for consistent monthly income and limited downside risk,” Kim added.
CLOX has an expense ratio of 0.20%. Panagram added that a portion of CLOX’s management fees will be donated to Mosholu Montefiore Community Center.
This is the second ETF Panagram has launched after listing the Panagram BBB-B CLO ETF (CLOZ) in January.
“Advisors are increasingly looking to higher income segments of the bond market like CLOs,” said VettaFi’s head of research Todd Rosenbluth. “While a relatively new ETF issuer, Panagram has extensive expertise to leverage in this market.”
Panagram will be speaking at the VettaFi Fixed Income Symposium on July 24.
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