CLOs Emerge as a High-Conviction Option Amid Steady Inflows

According to the flows report, the combination of bank loans and CLOs attracted $218 million inflows during the month of March. This appears modest compared to inflows into government debt. Still, it stands in stark contrast to more credit-sensitive sectors that saw a combined $6 billion in outflows. This includes a combined $7.4 billion in redemptions in high yield corporate bonds and emerging market debt.

From a year-to-date perspective, bank loans and CLOs secured $4.21 billion. This represents an impressive 7.04% of their total Assets Under Management (AUM). This suggests that investors are not just parking cash, but making a tactical shift toward instruments that offer floating-rate insulation.

We believe the current higher-for-longer narrative makes Reckoner Capital’s suite of specialized ETFs compelling options. Investors moving away from long-duration assets—evidenced by the $2.7 billion outflow from long-term government bonds—are seeking other avenues for yield. CLOs is an area where they should look. In particular, the Reckoner Yield Enhanced AAA CLO ETF (RAAA ) and the Reckoner BBB-B CLO ETF (RCLO) as options. These funds give Reckoner Capital Management the autonomy to adjust the holdings as necessary to suit current market conditions while pursuing their investment strategy.

CLOs are floating-rate vehicles, meaning their interest payments adjust as rates rise. We believe this provides a natural hedge in the current higher-for-longer environment marked by sticky inflation. By providing exposure to the senior-secured portions of corporate capital structures, Reckoner Capital’s ETFs allow investors to maintain income levels without the downward price pressure seen in fixed-rate bonds when yields rise.

In the current macroeconomic environment marked by ongoing uncertainty, persistent inflows into bank loans and CLOs is a testament to investor confidence. Reckoner Capital’s focus offers a bridge between the stability of cash and the income demanded in a high-inflation environment.

For more information on RAAA, click here, and for additional information on RCLO, click here.

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Carefully consider the fund’s objectives, risks, charges, and expenses before investing. The prospectus at each of the links above provides the full details. Read it carefully before investing. Investing involves risk including the risk of principal loss.

The fund’s principal investment risks include management risk, novel structure risk, affiliated fund risk, collateralized loan obligation risk, non-diversified fund risk, new fund risk, leverage risk, and liquidity risk. For additional information about these and other fund risks, please refer to the “Principal Investment Risks” section of the prospectus.

ETFs may trade at a premium or discount to NAV. Shares of any ETF are bought and sold at market prices (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.

Past performance is no guarantee of future results.

Collateralized Loan Obligations (“CLOs”) are structured products that issue different tranches, with varying degrees of risk, which are backed by an underlying portfolio consisting primarily of below investment grade corporate loans. Investments in CLOs presents risks similar to those of other credit investments. This includes interest rate risk, credit risk, liquidity risk, prepayment risk, and the risk of defaults of the underlying assets.

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