CLOZ: Floating-Rate Income-Hold Case

Node Analytica Research355 FollowersFollow5ShareSavePlay(11min)CommentsSummaryThe Eldridge BBB-B CLO ETF (CLOZ) offers attractive monthly income but faces declining distributions as SOFR rates fall.CLOZ primarily invests in mezzanine CLO tranches backed by senior secured loans, targeting moderate risk and capital preservation.Distributions are highly sensitive to SOFR; a 25 bps SOFR drop could reduce dividends by approximately 6%.With credit spreads stable and financial conditions lax, I recommend holding CLOZ to collect carry while monitoring macro and rate trends. DKosig/iStock via Getty Images Investment Thesis The Eldridge BBB-B CLO ETF(CLOZ) is a way to receive attractive monthly income. However, we expect future dividends to be lower due to the downward trend in the SOFR rate and its relationship to the type of debt acquiredThis article was written byNode Analytica Research355 FollowersFollowNode Analytica is a macro - onchain research firm whose founders have developed systematic investment strategies in the digital assets market in order to generate competitive and uncorrelated investment returns for institutional investors.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.