PAAA: A Guide To PGIM's AAA CLO ETF

Joseph E. Jones1.04K FollowersFollow5ShareSavePlay(11min)CommentsSummaryThe PGIM AAA CLO ETF targets income via a portfolio of floating-rate, AAA-rated CLO tranches, offering minimal interest-rate sensitivity and monthly distributions.CLOs are bonds created from pools of senior secured corporate loans, with payments flowing to investors based on seniority.PAAA’s distribution yield has hovered near 5%, consistently outpacing money markets and ultra-short bond funds with near-zero equity correlation.Since its July 2023 launch, PAAA has delivered ~6.8% total returns, slightly outperforming its benchmark and peers. DNY59/iStock via Getty Images The PGIM AAA CLO ETF (PAAA) is an income-focused bond ETF that holds the top-rated CLO securities. The portfolio is made up of floating-rate tranches and distributes income monthly. This article reviews PAAA’s strategy, its performanceThis article was written byJoseph E. Jones1.04K FollowersFollowDr. Joseph E. Jones is a professor at The University of Southern Mississippi. He focuses on portfolio construction from a dividend growth investment perspective. The insights expressed in his research are solely his own. They do not represent the views or financial interests of his employer.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.