The current market landscape is changing from persistent inflation with “higher-for-longer” interest rates to easing monetary policy. The installment of a new U.S Federal Reserve chairman could potentially change that narrative, which only adds to the uncertainty in the markets.
Against this backdrop, the Reckoner BBB-B CLO ETF (RCLO) is emerging as a strategic tool for income-focused investors, making it an ideal yield play in 2026.
RCLO is an actively managed fund investing in the collateralized loan obligations (CLOs). It specifically targets debt tranches rated between BBB+ and B-as it seeks to maximize current income.
RCLO’s 30-day SEC yield is 7.06% and a distribution yield of 6.99% (both as of January 30), making it an attractive option for yield seekers. The new Fed chair could align with an aggressive rate-cutting regime. Thus, the higher yield potential is appealing to fixed income investors looking to complement their existing bond portfolio.
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Standardized performance data current to the most recent quarter-end may be obtained by visiting https://reckoner.com/rclo/.
RCLO’s focus on BBB+ to BB- rated CLOs allows it to serve as a more diverse alternative to higher-yielding corporate bonds with similar credit ratings. The fund can complement an existing fixed income portfolio that primarily tilts toward bonds but adds additional income diversification.
Built-in Risk Management
Because RCLO is actively managed and invests in CLOs, it has a built-in risk management component. CLOs are tied to floating-rate coupons, which translates into near-zero interest-rate duration. In the event that the Fed raises interest rates to combat inflation, RCLO’s payouts adjust upward. This provides fixed income investors with a hedge from the price drops typically seen in traditional bonds with fixed rates.
Because the CLO market comes with its own unique set of risks and complexities, active management is valuable to ETF investors. RCLO’s portfolio managers have the autonomy to adjust holdings to fit the current market conditions. We believe this makes the fund an all-weather tool for income. Furthermore, RCLO taps into the experience of the fund’s managers. They have the requisite knowledge and experience necessary to navigate the CLO market.
Given current macro factors and impending market uncertainty, RCLO is an ideal alternative for yield seekers seeking options wrapped in the cost efficiency, flexibility, and transparency of an ETF, with a competitive expense ratio of 50 basis points.
For additional information on RCLO, click here.
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Important Information
Carefully consider the fund’s objectives, risks, charges, and expenses before investing. The prospectus at www.reckoner.com/rclo or 212.597.2500 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.
Distribution Yield is the annual yield an investor would receive assuming the most recent monthly distribution remained unchanged over a 12-month period. The Distribution Yield is calculated by annualizing the most recent distribution and dividing by the Fund NAV from the as-of date. The Distribution Yield does not include long- or short-term capital gains distributions.
30-day SEC yield is the fund’s annualized net investment income over the preceding 30 days divided by the maximum offering price as of the calculation date, multiplied by the average number of shares outstanding during the period.
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.
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, including interest rate risk, credit risk, liquidity risk, prepayment risk, and the risk of defaults of the underlying assets.
Distributor: Quasar Distributors, LLC.
