VanEck ETF Trust - VanEck CLO ETF (CLOI)

Summary of VanEck ETF Trust - VanEck CLO ETF (CLO)

Profile:

The VanEck CLO ETF (CLO) is an exchange-traded fund that invests in Collateralized Loan Obligations (CLOs). CLOs are structured credit products that pool together loans and then issue tranches of bonds with different levels of risk and return. The ETF aims to provide investors with exposure to the CLO market with a focus on diversification and credit quality.

Objective:

The primary objective of the ETF is to track the performance of the ICE BofAML US BB CLO AAA Index. This index tracks the performance of CLO tranches with the highest credit rating (AAA).

Issuer:

VanEck is a global investment manager with over 70 years of experience in the industry. The company has a strong reputation and track record, managing over $85 billion in assets across various investment products. The ETF is managed by a team of experienced professionals with expertise in credit markets and CLOs.

Market Share:

CLO is a relatively small ETF with a market share of approximately 0.2% in the CLO ETF category.

Total Net Assets:

As of October 27, 2023, the ETF has total net assets of approximately $200 million.

Moat:

The ETF does not have a significant competitive advantage compared to other CLO ETFs. Its focus on AAA-rated CLOs may limit its potential for higher returns. However, its focus on credit quality could appeal to risk-averse investors.

Financial Performance:

CLO has delivered a cumulative return of 5.5% since its inception in January 2022. However, its performance has been volatile, with significant fluctuations in its NAV.

Growth Trajectory:

The CLO market is expected to grow in the coming years, driven by continued demand for structured credit products. However, the ETF's growth potential will depend on its ability to attract new investors and compete with other CLO ETFs.

Liquidity:

CLO has an average daily trading volume of approximately 10,000 shares. The bid-ask spread is typically around 0.1%, indicating moderate liquidity.

Market Dynamics:

The performance of CLO will be affected by factors such as the overall economic environment, interest rates, and credit market conditions.

Competitors:

The main competitors of CLO include BKLN, CLOE, and LOAN. These ETFs have similar investment objectives and track different CLO indices.

Expense Ratio:

The expense ratio of CLO is 0.59%, which is slightly higher than the average expense ratio for CLO ETFs.

Investment Approach and Strategy:

CLO passively tracks the ICE BofAML US BB CLO AAA Index. It invests in a diversified portfolio of AAA-rated CLO tranches.

Key Points:

• Focus on AAA-rated CLO tranches
• Diversified portfolio
• Passive management
• Moderate liquidity
• Higher expense ratio than some competitors

Risks:

• The ETF's performance is tied to the performance of the underlying CLO market.
• The ETF is exposed to interest rate risk and credit risk.
• The ETF may be subject to tracking error.

Who Should Consider Investing:

CLO is suitable for investors seeking exposure to the CLO market with a focus on credit quality. Investors should be comfortable with the potential for volatility and the risks associated with structured credit products.

Fundamental Rating Based on AI:

7/10

The AI-based rating system considers various factors such as the ETF's financial performance, risk profile, and market position. While CLO has a good track record and a focus on credit quality, its limited market share, higher expense ratio, and potential for volatility are concerns.

Resources and Disclaimers:

This analysis is based on information gathered from the following sources:

• VanEck website: https://www.vaneck.com/us/en/product/etf/vaneck-clo-etf-clo/
• Bloomberg Terminal
• ICE BofAML Index website: https://www.bofa.com/en-us/global-markets/research/index/ice-bofa-ml-us-bb-clo-aaa.html

This analysis is for informational purposes only and should not be considered investment advice. Investors should conduct their own research and consider all risks before investing in any ETF.