CLOZ charges 0.50% to pick BBB-B CLO tranches, delivering 7% yield and 10% annualized returns versus JAAA's 5% at just 0.20%.
Active management fees earn their keep in BBB-B CLO tranches where manager and vintage selection drive returns, but add little value in AAA paper.
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Collateralized loan obligation ETFs have become one of the fastest-growing corners of fixed income by offering floating-rate coupons, historically low default rates, and yields that outpace investment-grade corporates. The trade-off is that CLO tranches are not standardized bonds, and the manager picking them matters. That is why the Eldridge BBB-B CLO ETF (NYSEARCA:CLOZ) charges 0.50% while the Janus Henderson AAA CLO ETF (NYSEARCA:JAAA) charges 0.20%, and the question is whether the extra fee buys something you cannot get elsewhere at a lower cost.
The four other funds worth measuring against CLOZ are JAAA, the Janus Henderson B-BBB CLO ETF (NYSEARCA:JBBB), the iShares AAA CLO Active ETF (NYSEARCA:CLOA), and the Eldridge AAA CLO ETF (NYSEARCA:CLOX). Each sits at a different point on the rating ladder and answers the active-versus-passive question differently.
The Federal Reserve has held the target rate at 3.75% for roughly seven months following three 25-basis-point cuts since September 2025. Floating-rate CLO coupons reset lower with each cut, compressing income and putting more weight on where a manager sits in the capital structure. The 10-year Treasury yields 4.54%, near the top of its 12-month range. Every extra basis point of expense ratio is a basis point the manager must earn back before the investor sees alpha.
Credit conditions remain cooperative. Card delinquencies drifted from 2.98% in July 2025 to 2.92% in January 2026, still in what the Fed calls the normalizing zone. That is the backdrop against which each fund must justify its cost.
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The Panagram Bbb-B CLO ETF brings active management to one of the more specialized corners of credit markets. Eldridge Structured Credit Advisers runs the strategy with Panagram Structured Asset Management, targeting CLO tranches rated BBB+ down to B-. Active selection matters here because pricing and default risk across mezzanine tranches can vary widely by manager, vintage, and underlying loan pool compared with the AAA segment. The fund holds 187 positions across issuers, including Benefit Street Partners, Bain Capital, Ares, Barings, Carlyle, and KKR, with individual tranche weights between around 1%.
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