CLOI vs CLOZ: Weighing Two Actively Managed CLO ETFs for Income and Stability

Key Takeaways

• Both funds are actively managed ETFs investing in CLOs (collateralized loan obligations), but CLOI targets investment-grade (IG) tranches while CLOZ targets lower-rated BBB and BB "mezzanine" tranches.
• CLOI carries a lower expense ratio (0.36%) and lower yield (roughly 5%), reflecting its higher credit quality; CLOZ charges 0.50% but offers a materially higher yield (roughly 9%).
• CLOZ offers greater total-return potential in benign credit environments, while CLOI emphasizes capital preservation and lower volatility.
• CLOI has larger AUM (assets under management) and a longer trading record, giving it a deeper liquidity profile than CLOZ.
• Tickeron AI Verdict: CLOI is the preferred ticker on a risk-adjusted basis, reflecting its lower cost, higher credit quality, and more consistent positioning.

Why These Two CLO ETFs Stand Out

Investors seeking floating-rate income have increasingly turned to CLO ETFs, which package pools of senior secured corporate loans into tradable tranches. CLOI and CLOZ sit within the same structured-credit niche but occupy very different points on the risk spectrum. This ETF comparison matters now because elevated interest rates have kept floating-rate instruments in demand, while a resilient corporate credit cycle has compressed spreads. The two funds do not compete on identical exposure; rather, they offer alternative ways to express a view on the same underlying loan market, with CLOI favoring safety and CLOZ favoring income. I also checked this using Tickeron’s AI Screener to see how the funds compare to others in the industry.

VanEck CLO ETF (CLOI) Overview

The VanEck CLO ETF (CLOI) is an actively managed fund sub-advised by PineBridge Investments. It seeks capital preservation and current income by investing at least 80% of its assets in investment-grade-rated tranches of collateralized loan obligations of any maturity. The portfolio typically holds more than 100 individual CLO tranches plus cash and short-term government instruments, reducing single-manager concentration. Representative positions have included Warwick Capital CLO 3, Rockford Tower CLO 2022-3, TCW CLO 2017-1A, Trinitas CLO XIV, and Bain Capital Credit CLO 2017-2, with no single holding dominating the book. The fund carries a net expense ratio of 0.36% and distributes income monthly, with a 30-day SEC yield near 5%. Because it focuses on senior, investment-grade tranches, CLOI prioritizes stability over yield maximization and is classified as non-diversified.

Panagram BBB-B CLO ETF (CLOZ) Overview

The Panagram BBB-B CLO ETF (CLOZ), managed by Panagram Structured Asset Management under the Eldridge brand, is an actively managed fund investing at least 80% of net assets in CLO tranches rated between BBB+ and B-. These mezzanine tranches sit below the senior, investment-grade layers in the payment waterfall, meaning they absorb losses earlier and therefore compensate investors with higher coupons. The fund holds roughly 150 to 190 positions, with exposure spread across managers such as Octagon, Madison Park Funding, CIFC, Oak Hill Advisors, and Bain Capital Credit. Its credit profile has historically split between BBB-rated (about 48%) and BB-rated (about 43%) tranches. CLOZ charges a 0.50% expense ratio and has delivered a 30-day SEC yield near 9%, reflecting its deliberately lower credit quality and higher income orientation.

Industry and Thematic Backdrop

Both funds operate in the collateralized loan obligation market, a large segment of structured credit that securitizes floating-rate leveraged loans. The current environment has been broadly supportive: persistently elevated short-term interest rates keep floating-rate coupons attractive, while resilient corporate earnings and limited default activity have supported loan prices. Heavy refinancing and reset activity has allowed CLO managers to extend reinvestment periods and lock in tighter funding costs. At the same time, the sector faces tail risks tied to covenant-lite lending, concentration in private-equity-backed borrowers, and any deterioration in credit conditions. These dynamics lift both funds' income potential but have an outsized effect on lower-rated tranches, making CLOZ more sensitive to spread movements and default expectations than CLOI. From what I see, this backdrop reinforces the importance of matching the right fund to an investor’s risk tolerance.

Performance and Positioning Comparison

In recent market cycles, CLOZ has generated meaningfully higher total returns and distributions than CLOI, consistent with its mezzanine exposure and roughly double the yield. However, this relative positioning comes with more pronounced drawdowns and price volatility during risk-off episodes, when lower-rated tranches reprice more sharply. CLOI, by contrast, has exhibited a smoother path and near-negligible beta to equities, trading more like a high-quality floating-rate bond portfolio. On a risk-adjusted basis, the funds' profiles diverge: CLOZ favors investors prioritizing current income, while CLOI suits those seeking stability and capital preservation. Sector momentum and credit conditions remain the dominant drivers of relative performance between the two. I’m watching this closely as credit conditions evolve.

Using Tickeron’s AI Tools in Practice

When comparing ETFs like these, I often rely on Tickeron’s AI Screener to quickly filter for yield, volatility, and credit-quality metrics across the structured-credit space. It helps surface relevant data points without manual effort and supports a more disciplined approach to portfolio construction.

Tickeron AI Verdict

Weighing structural strength, cost efficiency, diversification, credit quality, and relative risk exposure, Tickeron's AI would likely favor CLOI over CLOZ. While CLOZ offers superior yield and higher raw returns in benign conditions, its mezzanine exposure introduces greater drawdown sensitivity and credit risk. CLOI combines a lower expense ratio, senior investment-grade holdings, deeper liquidity, and more consistent volatility characteristics, producing a more favorable risk-adjusted profile across recent market cycles. The verdict is probabilistic rather than prescriptive, reflecting the trade-off between income and stability that defines these two funds.

Disclaimer

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Allana|Expert

Financial analyst and market blogger with expertise in equity research, fundamental analysis, and macroeconomic trends. I regularly publish coverage on individual stocks, ETFs, and sector developments — combining rigorous financial analysis with clear, engaging writing for a broad investment audience.

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