Panagram Structured Asset Management, a USD13.5 billion credit asset manager and a subsidiary of Eldridge, has launched its first ETF: Panagram BBB-B CLO ETF (NYSE: CLOZ).
The actively managed fund invests in Collateralized Loan Obligations (CLOs), which are designed to offer compelling risk-adjusted exposure to corporate credit. The firm writes that CLOs often have historically provided higher yield than similarly rated corporate bonds and benefit from structural rules that may benefit investors from credit loss. Cycle-tested and resilient, CLOs are backed by senior loans that sit at the top of the corporate capital structure and are secured by corporate assets, the firm says.
Despite growing to USD1 trillion in size, the CLO market requires expertise to navigate, Panagram says, describing itself as a CLO investment specialist, managing one of the largest portfolios of CLO debt and majority CLO equity. The Panagram team has extensive experience in originating, structuring, monitoring, and investing in the CLO market, the firm says. Due to Panagram’s long-standing relationships in the institutional CLO market, its move into the ETF space enables access to assets that have the potential to offer monthly income while diversifying away from stocks and bonds.
“Our goal is to provide investors with a liquid alternative to traditional fixed income with attractive structural features and competitive yield,” says John Kim, CEO of Panagram and Portfolio Manager of CLOZ. “We recognise how difficult 2022 was, and the historical outperformance of CLO tranches versus other corporates led us to create this innovative floating-rate product for the retail investor. We are excited to launch CLOZ, which seeks to democratise CLO exposure and provide investors with the added benefit of expert oversight.”
The portfolio of CLOZ will primarily comprise BBB and BB rated CLO bonds and is expected to pay a monthly dividend. Historically, the firm explains that CLO bonds rated BBB and BB not only tend to provide higher current yield than comparable credit products but also maintain low correlations to public debt and equity markets, making, the firm says, CLOZ a potential portfolio diversifier within today’s volatile market environment.
CLOZ is listed on the NYSE and has an expense ratio of 0.50 per cent.