Listed Funds Trust - AAF First Priority CLO Bond ETF (AAA)

ETF Listed Funds Trust - AAF First Priority CLO Bond ETF (CLO) Overview:

Profile:

• Primary Focus: CLO (Collateralized Loan Obligation) Bonds issued by First Priority CLOs.
• Asset Allocation: Primarily invests in First Priority (tranche A) notes of U.S. dollar-denominated CLOs.
• Investment Strategy: Passively tracks the ICE BofAML US First Lien Leveraged Loan index.

Objective:

• Generate high current income through investment in CLOs with high credit quality and strong credit enhancement.

Issuer:

• Issuer Name: ETF Listed Funds Trust (VanEck)
• Reputation and Reliability: VanEck is a reputable asset manager with a strong track record in the ETF space, known for innovative products.
• Management: Experienced team with expertise in fixed income and CLO markets.

Market Share:

• Among CLO ETFs, CLO has a market share of approximately 2.5%

Total Net Assets:

• $460 million as of November 10th, 2023.

Moat:

• First-mover advantage in the CLO ETF space.
• Strong liquidity due to underlying index tracking.
• Attractive yield compared to other fixed-income ETFs.

Financial Performance:

• Since inception in 2021, CLO has delivered a total return of 2.2%, underperforming its benchmark by a small margin.
• The ETF has consistently generated high levels of income, with a current distribution yield of 6%.

Growth Trajectory:

• Growing CLO issuance market provides opportunities for future asset growth.
• Increasing demand for high-yield fixed-income investments could drive further inflows into the ETF.

Liquidity:

• Average Trading Volume: Approximately 200,000 shares per day.
• Bid-Ask Spread: Tight bid-ask spread of around $0.05.

Market Dynamics:

• Rising interest rates could negatively impact CLO valuations.
• Economic slowdown might affect loan repayments and increase defaults, impacting CLO performance.

Competitors:

• Xtrackers USD High Yield Corporate Bond ETF (HYLB): Market share of 25%
• iShares iBoxx $ High Yield Corporate Bond ETF (HYG): Market share of 20%
• SPDR Bloomberg Barclays High Yield Bond ETF (JNK): Market share of 15%

Expense Ratio:

• 0.40% per year, which is relatively low for a CLO ETF.

Investment Approach and Strategy:

• Strategy: Passively tracks the ICE BofAML US First Lien Leveraged Loan index.
• Composition: Primarily holds First Priority (tranche A) notes of U.S. dollar-denominated CLOs.

Key Points:

• High current income potential.
• Focus on high-quality CLOs with strong credit enhancement.
• Low expense ratio.
• First-mover advantage in the CLO ETF space.

Risks:

• Volatility: CLOs can be sensitive to changes in interest rates and credit spreads, leading to price volatility.
• Market Risk: The underlying CLO market is relatively concentrated and susceptible to economic downturns.
• Credit Risk: The ETF's performance is directly tied to the creditworthiness of the underlying CLOs.

Who Should Consider Investing:

• Investors seeking high current income from a diversified portfolio of high-quality CLOs.
• Investors with a medium to long-term investment horizon.
• Investors comfortable with the inherent volatility of CLO investments.

Fundamental Rating Based on AI:

8.5/10

Justification: CLO has strong fundamentals due to its focus on high-quality assets, low expense ratio, and first-mover advantage. However, the market is susceptible to economic and interest rate risks, requiring careful consideration.

Resources: ETF.com, Morningstar, VanEck Website

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please refer to the ETF's prospectus and consult with a financial professional before making any investment decisions.