Collateralized loan obligations (CLOs), single securities supported by larger pools of debt, are one of the corners of the fixed income that aren’t as vulnerable to rising interest. This is expecially compared to, say, long-dated Treasurys and corporate bonds.
Alone, the ability to grab rising rates protection makes the VanEck CLO ETF (NYSE Arca: CLOI) – the original exchange traded fund dedicated to CLOs — appealing to income investors. Fortunately, CLOI’s perks don’t end with its protection against Federal Reserve tightening.
CLOI, which turned a year old in June, sports a 30-day SEC yield of 6.49%, confirming that there is indeed an attractive income proposition with CLOs. That yield is all the more noteworthy. CLO investors aren’t compensated for rate risk.
Volta Finance Ltd (LON:VTA) is a closed-ended limited liability company registered in Guernsey. Volta’s investment objectives are to seek to preserve capital across the credit cycle and to provide a stable stream of income to its Shareholders through dividends that it expects to distribute on a quarterly basis.
