Active Management is the Edge CLO Investors Can’t Afford to Miss
November 26, 2025
Read Time 1 MIN
Why CLOs Stand Out in Fixed Income
CLOs continue to present a compelling value proposition for investors seeking floating‐rate income and diversified credit exposure. Their structural protections and active management components help mitigate credit risk while capturing enhanced yields compared with traditional corporate bonds.
Key Takeaways:
- [05:52] CLOs may strengthen core bond portfolios and ETFs may provide broader access to the asset class.
- [10:25] CLOs may offer a yield advantage versus similarly rated IG corporates while maintaining floating‐rate exposure that reduces duration risk.
- [12:45] Manager expertise, strong security selection, tranche analysis, and experience drive performance dispersion in CLOs, making active management critical.
- [28:36] Investors are paying closer attention because of credit concerns with First Brands and Tricolor. These risks seem specific to those companies, not the broader market. Weaker credits could come under some pressure, but careful security selection, especially in mezzanine tranches, should help keep the impact limited.
- [43:05] CLOs offer value, but selectivity is vital amid rate shifts, tariffs, and credit market risks.
How to Invest in CLOs
VanEck has partnered with PineBridge Investments on the VanEck CLO ETF (CLOI), which provides access to investment grade floating‐rate CLOs, as well as the VanEck AA‐BB CLO ETF (CLOB), which offers more targeted exposure to the mezzanine tranches of CLOs. Both CLOI and CLOB benefit from PineBridge's decades of CLO market experience, both as a CLO manager and CLO tranche investor, and deep leveraged finance expertise. CLOI's current 30‐day SEC yield is 5.43% and CLOB's is 6.59% (as of 10/31/2025).
For the latest data and yields for VanEck's full suite of income investing solutions, please refer to our Income Investing Yield Monitor.
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IMPORTANT DISCLOSURES
The performance data quoted represents past performance. Past performance is not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Please call 800.826.2333, or click for performance current to the most recent month end.
Please click here for CLOI standardized performance.
Please click here for CLOB standardized performance.
30‐Day SEC Yield – A standard yield calculation developed by the Securities and Exchange Commission that allows for fairer comparison among funds. It is based on the most recent 30‐Day period. This yield figure reflects the interest earned during the period after deducting the Fund's expenses for the period. It does not reflect the yield an investor would have received if they had held the Fund over the last twelve months assuming the most recent NAV.
VanEck disclaims responsibility for content, legality of access or suitability of the third party websites. VanEck provides links to third party websites only as a convenience and the inclusion of such links does not imply any endorsement, approval, investigation, verification or monitoring by us of any content or information contained within or accessible from the linked sites. All persons accessing this link do so on their own initiative and are responsible for compliance with applicable local laws and regulations.
Sharpe ratio is a measure used in finance to evaluate the performance of an investment compared to a risk-free asset, after adjusting for its risk. It is calculated by subtracting the risk-free rate of return (such as the return on U.S. Treasury Bonds) from the rate of return for a portfolio and then dividing the result by the standard deviation of the portfolio returns. This ratio helps investors understand how much excess return they are receiving for the extra volatility that they endure for holding a riskier asset. A higher Sharpe ratio indicates a more attractive risk-adjusted return.
Duration is a measure of a bond’s price sensitivity to a change in interest rates. Duration is expressed as a number of years and reflects the expected percentage price change of a bond for a 100 basis point change in interest rates.
The potential profit, commonly referred to as “the spread,” is composed of the risk premium plus the risk-free rate. The risk premium exists to compensate investors for assuming the deal-specific risks associated with a pending transaction. Therefore, an increase in the risk-free rate is expected to result in a wider spread and a more favorable return to investors.
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the speaker(s), but not necessarily those of VanEck or its other employees.
An investment in the VanEck AA‐BB CLO ETF (CLOB) and the VanEck CLO ETF (CLOI) may be subject to risks which include, but are not limited to, risks related to Collateralized Loan Obligations (CLO), debt securities, foreign currency, foreign securities, investment focus, newly‐issued securities, extended settlement, affiliated fund investment, management and capital preservation, derivatives, currency management strategies, cash transactions, market, Sub‐Adviser, operational, authorized participant concentration, no guarantee of active trading market, trading issues, fund shares trading, premium/discount, liquidity of fund shares, non‐diversified, seed investor, and new fund risks, all of which may adversely affect the Funds. Investments in debt securities may expose the Fund to other risks, such as risks related to liquidity, interest rate, floating rate obligations, credit, call, extension, high yield securities, income, valuation, privately‐issued securities, covenant lite loans, default of the underlying asset and CLO manager risks, all of which may impact the Fund's performance. Derivatives may involve certain costs and risks such as liquidity, interest rate, and the risk that a position could not be closed when most advantageous.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Funds carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.
Related Funds
IMPORTANT DISCLOSURES
The performance data quoted represents past performance. Past performance is not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Please call 800.826.2333, or click for performance current to the most recent month end.
Please click here for CLOI standardized performance.
Please click here for CLOB standardized performance.
30‐Day SEC Yield – A standard yield calculation developed by the Securities and Exchange Commission that allows for fairer comparison among funds. It is based on the most recent 30‐Day period. This yield figure reflects the interest earned during the period after deducting the Fund's expenses for the period. It does not reflect the yield an investor would have received if they had held the Fund over the last twelve months assuming the most recent NAV.
VanEck disclaims responsibility for content, legality of access or suitability of the third party websites. VanEck provides links to third party websites only as a convenience and the inclusion of such links does not imply any endorsement, approval, investigation, verification or monitoring by us of any content or information contained within or accessible from the linked sites. All persons accessing this link do so on their own initiative and are responsible for compliance with applicable local laws and regulations.
Sharpe ratio is a measure used in finance to evaluate the performance of an investment compared to a risk-free asset, after adjusting for its risk. It is calculated by subtracting the risk-free rate of return (such as the return on U.S. Treasury Bonds) from the rate of return for a portfolio and then dividing the result by the standard deviation of the portfolio returns. This ratio helps investors understand how much excess return they are receiving for the extra volatility that they endure for holding a riskier asset. A higher Sharpe ratio indicates a more attractive risk-adjusted return.
Duration is a measure of a bond’s price sensitivity to a change in interest rates. Duration is expressed as a number of years and reflects the expected percentage price change of a bond for a 100 basis point change in interest rates.
The potential profit, commonly referred to as “the spread,” is composed of the risk premium plus the risk-free rate. The risk premium exists to compensate investors for assuming the deal-specific risks associated with a pending transaction. Therefore, an increase in the risk-free rate is expected to result in a wider spread and a more favorable return to investors.
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the speaker(s), but not necessarily those of VanEck or its other employees.
An investment in the VanEck AA‐BB CLO ETF (CLOB) and the VanEck CLO ETF (CLOI) may be subject to risks which include, but are not limited to, risks related to Collateralized Loan Obligations (CLO), debt securities, foreign currency, foreign securities, investment focus, newly‐issued securities, extended settlement, affiliated fund investment, management and capital preservation, derivatives, currency management strategies, cash transactions, market, Sub‐Adviser, operational, authorized participant concentration, no guarantee of active trading market, trading issues, fund shares trading, premium/discount, liquidity of fund shares, non‐diversified, seed investor, and new fund risks, all of which may adversely affect the Funds. Investments in debt securities may expose the Fund to other risks, such as risks related to liquidity, interest rate, floating rate obligations, credit, call, extension, high yield securities, income, valuation, privately‐issued securities, covenant lite loans, default of the underlying asset and CLO manager risks, all of which may impact the Fund's performance. Derivatives may involve certain costs and risks such as liquidity, interest rate, and the risk that a position could not be closed when most advantageous.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Funds carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.