9% Yield Without the Rollercoaster? CLOZ ETF Explained

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  • Опубліковано 20 січ 2025

КОМЕНТАРІ • 212

  • @armchairincomechannel
    @armchairincomechannel  Місяць тому +2

    ➡Snowball Dividend Tracker
    (Create a Free Account, and the 10% Discount will appear under "Subscribe"):
    armchairincome.link/snow

  • @kevmed64
    @kevmed64 Місяць тому +13

    Awesome overview of CLO tranches and how and where EIC, ECC, and JBBB play in this. That risk tranche graphic with the ETF overlays, is the best visualization I've seen. Not sure what your pre-retirement gigs were, but you are clearly an excellent educator!

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +1

      Thanks for your feedback. In my past life I worked in commercial real estate. Glad the visuals were helpful!

  • @williamtaylor1233
    @williamtaylor1233 Місяць тому +5

    Lots of interest here in a well-done presentation. Good discussion of the difference between ETF and CEF vehicles to access this asset class, but a BIG additional difference is that CEFs use leverage. That's why CLOZ pays 9% and EIC pays about 15%, with much the same assets. Leverage is usually a good thing with high spread assets like CLO equity and junior debt. The highest yielding vehicles are CLO equity CEFs like ECC, OXLC, OICC, all yielding 18-20%.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +3

      That's a good point. I could have mentioned the absence of leverage in CLOZ. EIC also includes some equity tranches which offer higher yields, but the leverage moves the needle more.

    • @hifinsword
      @hifinsword 25 днів тому +1

      To me leverage equals risk, the exact opposite of what I'm seeking.

  • @ClintonSiegel
    @ClintonSiegel Місяць тому +14

    Great deep dive - as always I love the graphics and illustrations. On this Thanksgiving I am giving thanks for this channel and all the invaluable information it provides.

  • @mrallan8063
    @mrallan8063 Місяць тому +14

    This is a much better explanation of of collaterized loan/debt (a loan is by definition a type of debt). Thank you. I think a big aspect beyond just the debt rating (which is very important) is the underlying business & assets. While this should be factored into the debt ratings, there is a lag in when debt is re-classed (and it's almost always a downgrade). A debt can be rated highly due to current and future prospects, but that can change before it reaches maturity. Sometimes it can take months, quarter, or even longer before it's announced. Diversification is good, so a broad mix of investments is wise. I personally like the etf with preferred shares of most utility companies that is slightly leveraged as a bond-like/fixed incomesque holding.

    • @peoriaos6627
      @peoriaos6627 Місяць тому +4

      Which etf is that?

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      You raise a good point, and it's difficult to assess that risk. I like preferred shares too!

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      I was wondering the same thing. Closest I have to that is PFFA, but they also have financial prefs.

  • @marshallmason1
    @marshallmason1 Місяць тому +4

    I was about to comment with my risk concerns, but you covered it! Only thing I'd point out, then, is that JAAA's yield is only slightly higher than SGOV at the moment, making it barely worth the risk. But long term, its yield has been much higher. So maybe it's more worth the risk in a low rate environment.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +2

      It's a challenge to figure out how much extra yield is worth the risk. SGOV lowered its dividend after I recorded this episode so the difference is a bit wider now.

  • @surelywoo
    @surelywoo 25 днів тому +2

    Good breakdown. I'm on a similar journey and everything you said agrees with what I have learned. I bought ECC earlier, which has a good yield but significant capital erosion. Thanks for making me aware of CLOZ.

    • @armchairincomechannel
      @armchairincomechannel  24 дні тому +1

      You're welcome. At the moment I'm liking JBBB. More about it coming in the next video.

  • @RMROTONDO
    @RMROTONDO 26 днів тому +1

    First time here. Refreshing delivery and great info!

  • @momdittomomditto7705
    @momdittomomditto7705 Місяць тому +1

    My Sunday go-to channel! Always happy to watch and learn while listening to your charming accent. I own iclo and jaaa. Will keep an eye on cloz.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      Thanks for your kind words; great to hear :) Those 2 have been a nice steady 6% plus recently. Thanks for sharing.

  • @Income_Architect
    @Income_Architect Місяць тому +16

    Great video. Thanks. I did a video on CLOZ and I am currently building this one out. Living on my distributions like you. Have a great day.

    • @Optimus-Prime-Rib
      @Optimus-Prime-Rib Місяць тому +2

      You have a pretty decent channel too 👍🏽

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +1

      Hi! I watched that video and enjoyed it. Thanks for watching and commenting.

  • @Lawyerup904
    @Lawyerup904 Місяць тому +2

    Continuing to build my income factory and these definitely look like candidates for further evaluation. As always, thanks for the video!

  • @txbgould
    @txbgould Місяць тому +8

    Thanks for drawing attention to funds that might not make in my radar otherwise. I always learn something from your content.

  • @sdrs95a
    @sdrs95a Місяць тому +2

    Excellent Summary! CLOZ one of my favorites.

  • @robertrice7362
    @robertrice7362 Місяць тому +1

    Thanks for all the analysis and alternative ideas. I appreciate the transparency as well. Keep up the great product and effort. 👍

  • @billibarou
    @billibarou Місяць тому +1

    You did a great job reviewing this fund and making it easy to understand. Thank you.

  • @davidferrara
    @davidferrara Місяць тому +1

    Hi, love your channel you do a great job.
    Your presentation of CLOZ makes a compelling case for owning TLTW, I already own a position in it, I agree wholeheartedly with you that no one really knows how rates will move, hence the volatility in TLT (long bonds in particular) really plays well into the TLTW model. It may not be for you as it yields about 17 percent but I would say that most of the people who watch your channel and are income oriented have a diversified portfolio. Which is wise.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      Thanks for your kind feedback! I don't currently own TLTW because it's more binary...meaning it does well (in terms of price) when rates on long duration treasuries fall but not when rates rise. Having said that, if you get it wrong, the high income provides a cushion.

  • @TonyCox1351
    @TonyCox1351 Місяць тому +6

    First heard about this fund on the Income Architect. Now it’s got the Armchair Income seal of approval. I’ll be buying soon, too many good funds out there, not enough money to buy them all 😂

  • @mikeconnell698
    @mikeconnell698 Місяць тому +1

    Thanks for the video. I've been impressed with CLOZ. Its now one of my biggest holdings.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +1

      Glad it was helpful. I plan to begin with a small allocation because it's young and experienced a recent change of management. Also looking at JBBB.

  • @davidwysocki1004
    @davidwysocki1004 Місяць тому +1

    Thanks, Armchair, for an interesting presentation on CLOZ. I have never really considered a CLO-focused fund but dig deeper into CLOZ, JAAA and JBBB after watching your video presentation.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      Glad it was helpful! There are so many interesting investment opportunities beyond the same old 10-20 that are always on CNBC.

  • @DP52001
    @DP52001 Місяць тому +4

    More great content! Thank you sir!!!

  • @josephlance9262
    @josephlance9262 24 дні тому +1

    Love learning about new income options. I am years away from retirement, but this is still very interesting. Never heard of CLOs before. Thank you sir.

    • @armchairincomechannel
      @armchairincomechannel  24 дні тому +1

      Glad you enjoyed it! Often the boring or complicated investments get no coverage in the media.

  • @enricomonesi5856
    @enricomonesi5856 Місяць тому +1

    Keep up the GOOD work.......always look forward to your content 😊

  • @mlwilliams4407
    @mlwilliams4407 Місяць тому +4

    Another incredible video...thank you! Any idea why JAAA's dividends were so low in 2021 and started to ramp up in 2022? CLOZ didn't exist in 2021/2022 so wondering if dividends for it would be quite a bit less for it too due to the same/similar CLO-related conditions.
    For those in the US that are interested, according to a Seeking Alpha article, CLOZ is not tax advantaged so best in a retirement account (IRA, etc).

    • @hatecriminai8241
      @hatecriminai8241 Місяць тому +3

      These are all floating rate loans, so they will track the overnight rate set by the fed. The difference in yield btw the risk free yield (T-bills) and another floating rate bond is called the 'credit spread'. JAAA's yield was 6.3% TTM, T-Bill were paying around 5.2% TTM, so the spread is around 1% for JAAA. In 2021 T-bills were paying basically nothing and JAAA was paying 1% over basically nothing. CLOZ yielded 9% TTM, so it could go down to as low as 4% if we go back to ZIRP.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      Yes, CLOZ distributes ordinary income so an IRA makes sense. CLO's are floating rate so the income will move up and down with the Fed Funds rate. Currently, the rates are high :)

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      Great explanation, thanks for taking the time to share that!

  • @gonglo4902
    @gonglo4902 Місяць тому +1

    Love your videos. This one on CLOs got me looking into this type of investment. Thought I'd mention that your explanation of how they work is, however, a bit incorrect. The underlying "leveraged" loans are "All" non-investment grade by definition (loans made to lower rated companies). The traunch categories all use the same full pool of loans (loans are not split up into different risk categories). The CLO traunches are levels of "who gets paid first" with what is left over falling through to the next lower category in a waterfall fashion. It is common for loans to default within a CLO, but the losses are (so far always) paid for by the lower traunches.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      Thank you for your feedback. I mostly agree with your feedback. I didn't go into the waterfall aspect of CLO structure and, I agree, it's relevant. I was over simplifying. AAA gets paid first and equity gets paid last. I should also clarify the difference between defaults on loans inside CLO's and default rates on the CLO's themselves. The default rate for CLO's is very low; less than 1% per the chart from the video. In the future I hope to interview a CLO fund manager to get into this level of detail.

  • @SummitMan165
    @SummitMan165 Місяць тому +1

    Good episode again ! As a foreign investor vs US market, how do you manage taxes between different income sources? Have you a flat taxes rates on foreign income and what are taxes in the country you’re in? Does the foreign investor situation made for to be taxed on all the same rate between capital gain, ROC, regular dividends and Interests?

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +1

      My personal tax situation is different from the majority of (US) viewers so I don't go into detail on it. Non-US tax residents enjoy some benefits when investing in US markets, depending on the nature of the tax treaty (if applicable) between their tax residency Country and the US. Some benefits include an exclusion from capital gains tax. There are different tax rates for each type of income...qualified, ordinary, etc.

    • @SummitMan165
      @SummitMan165 Місяць тому

      @ thanks for sharing! And your good contents!

  • @hulenbryant5637
    @hulenbryant5637 Місяць тому +1

    Thanks for the awesome video. Great info. I was looking for another position to add to my portfolio. I'm liking the looks of CLOZ and will be making it about 2% of my portfolio. Treating CLOZ like PBDC with BDCs.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      Glad it was helpful. I think CLO's should be viewed as a spectrum and consider creating a blend of the various levels of credit risk and yield to get the level that works for you.

  • @jimsteinberg9291
    @jimsteinberg9291 Місяць тому +1

    Masterful & timely analysis of the pros and cons of CLOZ vs. other similar funds with different credit portfolios. Armchair reads and synthesizes the SA analysis which Couch investors like me benefit from and delivers in clear, personable, articulate English/Australian (?)

  • @LanceSoFast1
    @LanceSoFast1 Місяць тому +2

    Hello. I have been investing in CLOZ for the past few months. No selling, just buy and hold. I’ve been very impressed with the capital preservation so far no erosion. I’ve also noticed that it doesn’t fall off the cliff at the end of the month like some CLO funds do. I’m sure there will be some volatility going forward. Also, the fund manager resigned, and he was replaced by someone new. From what I understand, the new team has experience. I guess we will find out.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +1

      Thanks for sharing your experience. I'm also interested to learn more about the new management team at CLOZ.

  • @peterholmes2089
    @peterholmes2089 Місяць тому +2

    Thanks, that was a good explanation. The small spread between JAAA (6.4%) and CLOZ (9%) doesn't quite seem to justify holding the higher risk funds to me at this time though.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      That's a good point. Difficult to measure the exact spread that makes sense but another percent or two would make it more compelling.

  • @johnspelman8976
    @johnspelman8976 Місяць тому +3

    Great video, learned alot

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      Glad you enjoyed it! I learned a lot from the research so am happy to hear you're into this topic too :)

  • @Dahon5
    @Dahon5 Місяць тому +1

    If interest rates are going lower will the income be lower and the stock price too? It seems to be a better recommend when interest rates are going up?

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      Yes, the lower interest rates go, the lower the income will go. There will be a delay of a few months before the impact is felt. I don't know if interest rates will go down slightly or a lot, or whether they'll reverse and go up again!

  • @ShunzeyBunzer
    @ShunzeyBunzer Місяць тому +1

    Great take. Cloz a JAAA have been really stable for me, with attractive yields.

  • @andrewd9633
    @andrewd9633 Місяць тому +2

    I own JAAA, I like the idea of a mix for a blended yield

  • @Madmanshooter
    @Madmanshooter 26 днів тому +2

    Excellent presentation

  • @ThePolishedapple
    @ThePolishedapple 17 днів тому +1

    If we think there will be a correction or recession in the next two years which causes CLOZ to drop 10% again, does it not make more sense to hold JAAA with just 3% lower? After tax you would have to avoid a recession for over 2 and a half years before the extra income CLOZ provides allows you to fall 10% and still ahead. Personally I’m all in on JAAA.

    • @armchairincomechannel
      @armchairincomechannel  17 днів тому +1

      That's a personal choice based on your risk tolerance, and approach to volatility. Personally, I'm not sensitive to the value of my portfolio dropping for 1-2 years if the income is consistent. If the value of your portfolio dropping is an issue, then JAAA aligns more closely with your goals than CLOZ.

  • @MessedUpParodies
    @MessedUpParodies Місяць тому +1

    Interest rates are high at the moment. My question is, when rates finally drop back down to "normal" levels, how much will CLOZ's 9% distribution lower? For example, if interest rates were to drop 2%, would CLOZ then yield 7% ???

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      In round numbers, yes. The distributions will rise and fall with the Fed Funds rates (after a short delay). I don't know which way rates will go so I'm just enjoying the steady income for now. If rates fall substantially then these CLO's may lose their appeal.

  • @get30inc
    @get30inc 23 дні тому +1

    How do you find that information on what % of each tranche a CLO is invested or their focus is? Snowball?

    • @armchairincomechannel
      @armchairincomechannel  23 дні тому

      The fund manager's website. Here's an example for JBBB cdn.janushenderson.com/webdocs/FactSheet_JBBB_ETF_2024_09_exp_2025_01.pdf

    • @get30inc
      @get30inc 22 дні тому

      Okay, thank you! That helps a lot

  • @randallmanring1661
    @randallmanring1661 Місяць тому +1

    At face value...this seems like it would be a good compliment to SVOL for the income part of a portfolio. Interested to see how you weight CLOZ vs the other top tier income players.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +1

      I will start with a small weighting to CLOZ because 1/ It's new and 2/ They recently changed the management team.

  • @ToddPatty-yg7hd
    @ToddPatty-yg7hd 27 днів тому +1

    Great explanation for this one brother! Wishing you wealth and prosperity in 2025.

  • @jeremysmith3142
    @jeremysmith3142 Місяць тому +1

    Thank you for video. Still working currently but ETF and CE portfolio about to cover expenses. Curious about either adding a CLOZ vs increasing my current BXSL position. For some reason having John Gray at blackstone in my corner vs Panagram.....which seems to have an extremely small management team. These CLOs mark to market so trying to get handle on the impact on yield if rates have peeked. Also looking at ISD managed by PGIM one of worlds best fixed income managers. 16 holding right now looking to get to 24 so looking to add -thanks again this channel is truly best in class.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +1

      Thanks for your kind words. I like BXSL too, however, it is just one company so there's concentration risk. I'll look further into Panagram because I don't know much about them either.

  • @jayman4795
    @jayman4795 Місяць тому +2

    The fund seems solid, but a concern is that its management team apparently resigned recently? Not clear what happened but this raises a potential flag. Would be good to get some insight into this.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +1

      Yes, that's a good point. I haven't been able to find any background or explanation on why he resigned or the extent to which his departure affects the ability of portfolio managers to continue delivering consistent results. It is something to consider, and the bottom line is I'll start with a small investment and wait for more information (or time to pass) before adding to it.

  • @wallysta
    @wallysta Місяць тому +1

    I think you may have mis-interperated the way the loans are pooled. All the loans in a CLO are typically below investment grade, BB or below. What gives the AAA tranche its rating is that they get paid before anyone else. The tranches below only get paid after AAAs obligations have been met. If you assume 75% recovery for default with the collateral, even with 100% default rate, AAA (~65% of a CLOs bonds) & AA (~10%) would still get their money back.
    As long as the collateral in the loans is good, the BBB & BB tranches could cope with pretty high default rates, (~20%) before any loss of capital as well. The equity tranche takes on the majority of the risk

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +2

      Thanks. You make a great point. I have over simplified it. The waterfall structure of CLO's is what makes the upper tranches less risky. In a future episode I'd like to get into the mechanics of how that works, ideally with a CLO fund manager.

    • @wallysta
      @wallysta Місяць тому +1

      @armchairincomechannel That would be an excellent episode. Keep up the good work!

  • @peoriaos6627
    @peoriaos6627 Місяць тому +1

    Great video as usual!

  • @MickeyJessieCupid
    @MickeyJessieCupid Місяць тому +1

    Is Seeking Alpha’s Quant score missing something with CLOZ? It rates it a “sell.” Love your videos and thought this question would be of interest because it’s not uncommon to see low Quant scores for these income generating funds.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      I don't use the quant score because its focused on appreciation and I'm focused on income. I assume that most of CLOZ's best appreciation has already occurred because interest rates have peaked so its not a great buy from an appreciation perspective.

  • @SouthernBoyAbroad
    @SouthernBoyAbroad Місяць тому +1

    for Snowball, if i am just getting started, is there any reason to do the "investor" pckg over the "starter"?....my plan is to be be diversified over about 20 stocks

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      I think Starter is enough for most people. The main difference is that "Investor" gives you the option to simultaneously hold multiple portfolios...eg. a growth and an income, or a taxable and an IRA, etc.

  • @lucasasselmeier7825
    @lucasasselmeier7825 Місяць тому +1

    Do you allocate your assets to have diversification between the different asset classes? Ik your investing in more alternative classes, are you spreading them to reduce risk?

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +1

      Exactly! I'm more focused on diversification to reduce risk than I am on maximizing returns. I'm looking for consistent income, regardless of market conditions.

    • @lucasasselmeier7825
      @lucasasselmeier7825 Місяць тому

      @@armchairincomechannel yeah even though I’m in my late 20’s I want the same thing. I’m just now checking out strategies for high yield and conservative, predicable cashflows

  • @khanbus
    @khanbus 24 дні тому +1

    "Could you create a video comparing JAAA, JBBB, ECC, and CLOZ ETFs, highlighting their differences and associated risks?

    • @armchairincomechannel
      @armchairincomechannel  24 дні тому

      I'll take your suggestion into consideration. The next video to come out will address most of what you requested...

  • @5584oleta
    @5584oleta Місяць тому +1

    Great video. Just in case you don’t mind: You mentioned you’re an expat to make your income stretch and I think you may have mentioned SE Asia. Which country do you live in?

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +1

      I don't give into my personal info on UA-cam but if you join the Armchair Income Community we have more open discussions and meetups. Here's the link: facebook.com/share/g/1H71aTgXmt/ Generally speaking though, I spend time in Vietnam, Thailand, and next year, Bali, and Kuala Lumpur.

  • @nobodysfool2232
    @nobodysfool2232 16 днів тому +1

    The problem with this is the tax bill at the end of the year. As CLOs pay interest income, the distributions from CLOZ are taxed at ordinary income and that’s brutal! Basically take that 9% and cut it in half after taxes. Now what?

    • @Dr_DeeDee
      @Dr_DeeDee 16 днів тому +1

      You're right. If possible, do your dividend investing from a Roth account.

    • @armchairincomechannel
      @armchairincomechannel  16 днів тому

      Everybody's tax situation is different. Sounds like ordinary income isn't ideal for you.

  • @brentalan67
    @brentalan67 Місяць тому +1

    Wondering what your thoughts are on the CEO and other key partners resigning from Panagram earlier this month.
    I've watched a few videos from the former CEO John Kim and liked his approach.
    That team was billed as CLO experts so I'm wondering if the future management of the fund will be as good going forward.

    • @viaggi3945
      @viaggi3945 Місяць тому +1

      Saw that in the news. They didn’t give a reason, which is not good. I would stay away until they clarify it.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +1

      Yes, that's a good point. I haven't been able to find any background or explanation on why he resigned or the extent to which his departure affects the ability of portfolio managers to continue delivering consistent results. It is something to consider, and the bottom line is I'll start with a small investment and wait for more information (or time to pass) before adding to it.

    • @brentalan67
      @brentalan67 Місяць тому

      @@armchairincomechannel Thanks for looking into it!

  • @BenjaminHansen
    @BenjaminHansen Місяць тому +1

    Thanks for the video!

  • @TristanRailsback-c9c
    @TristanRailsback-c9c Місяць тому +3

    Speaking of low credit ratings I think I have like 50$ in XCCC just to experiment

  • @Steverino70
    @Steverino70 Місяць тому +1

    Enjoyed the video.

  • @georgezipp8783
    @georgezipp8783 21 день тому +1

    Thanks

  • @UCxmklssd3yrR6TqbzQdVMew
    @UCxmklssd3yrR6TqbzQdVMew 24 дні тому +1

    I am thinking to sell CLOZ before and buy again on ex-div date to avoid 30% non resident tax on dividends

    • @armchairincomechannel
      @armchairincomechannel  24 дні тому +1

      That's not an effective long term strategy. I recommend 1/ Check if your country has a tax treaty with the US that lowers the dividend withholding amount. Many countries are at 15% 2/ File a tax return with the IRS as a foreigner and you will only pay the tax due (which is usually far less than 30%). The IRS will send you a check for the difference.

    • @UCxmklssd3yrR6TqbzQdVMew
      @UCxmklssd3yrR6TqbzQdVMew 23 дні тому

      @@armchairincomechannel Agree, I took a smaller position in OXLC, it is a leveraged CLO ETFs, it pays 20% dividends.

  • @biyordie4886
    @biyordie4886 26 днів тому +1

    Hi, new here. exelent videos,
    So did you invest in this clo?
    I down loaded your port, but its from May. dont see it on there?
    Thanks

    • @armchairincomechannel
      @armchairincomechannel  26 днів тому

      Hi, and thanks! I have not bought CLOZ yet. That's why I issue the newsletter...things change after I release a video! In this case, I still don't have a good sense of how the new management will do after the CEO left in November 2024. Also, the latest distribution was lower than previous ones. For these reasons, I bought JBBB while I'm waiting. I'll keep an eye on it!

    • @biyordie4886
      @biyordie4886 25 днів тому

      @@armchairincomechannel Thanks!

  • @dan91121
    @dan91121 22 дні тому +1

    To be fair isn't it only triple A CLOs that actually have the best risk return?

    • @armchairincomechannel
      @armchairincomechannel  22 дні тому

      I would say that AAA is the lowest risk, but risk to return ratio is a different matter. If JBBB paid a lot more but was only slightly higher risk then it would be an attractive risk return. The yields on these are constantly changing but the market generally keeps the risk return in line for each level of risk....meaning if JBBB DID become a great risk return opportunity, more investors would buy it, driving up the price, and lowering the yield.

    • @dan91121
      @dan91121 19 днів тому

      @@armchairincomechannel Thanks for the reply! Maybe you can correct me but I think we might be agreeing in some sense.
      The spread between JAAA being tighter than JBBB would imply there is a greater appetite for AAA CLOs, and I think you would agree given the current market composition being about 70% AAA. JBBB offers about 200-300 extra basis points over JAAA but you end up with a significantly smaller default threshold, so why would it make sense over for example maybe purchasing something like JAAA when the spread is wider - arguably it would be a much safer strategy and potentially as lucrative and you get the seniority benefit in securitization as well as the overcollateralization?
      Additionally, given the recent macroeconomic trends such as tarrifs, wouldn't it make sense to probably stay clear of anything not in AAA/AA? Default rates could realistically cause issues for the mezzanine and equity tranches in the foreseeable future.

  • @ronrocheleau3035
    @ronrocheleau3035 Місяць тому +1

    Great video. Great channel but can I make a suggestion? Reduce your ads and promos. I believe it accounts for a disproportionate amount of your content.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      Thanks for your feedback. It was a bit heavier this week because of Black Friday. During the interview with Dave 2 weeks ago there were zero promotions. Still working on the right balance.

  • @michaelt2974
    @michaelt2974 Місяць тому +1

    Anyone have an opinion on BUCK

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      Haven't looked into that one. Simplify has so many ETF's its hard to keep up!

  • @JustAnotherPersonHere
    @JustAnotherPersonHere Місяць тому +1

    100th video! 🎉

  • @RobertZahler-m2l
    @RobertZahler-m2l Місяць тому +1

    Does the recent, abrupt resignation of the CLOZ investment advisor CEO (and a number of his team) give you any concern?

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      Yes, that's a good point. I haven't been able to find any background or explanation on why he resigned or the extent to which his departure affects the ability of portfolio managers to continue delivering consistent results. It is something to consider, and the bottom line is I'll start with a small investment and wait for more information (or time to pass) before adding to it.

  • @chassdesk
    @chassdesk Місяць тому +1

    Nice one

  • @strongmarketresearch
    @strongmarketresearch 28 днів тому +2

    I think I saw how this ends in the movie “Dumb Money”

    • @armchairincomechannel
      @armchairincomechannel  27 днів тому

      "Dumb Money" is a movie about people using social media to drive up the price of a stock far beyond its intrinsic value. CLO's are pools of business loans, organized by their credit rating, with a historical default rate of less than 1%. I don't see the parallel. Perhaps you're thinking of CDO's, they're a different story.

  • @vitawater4259
    @vitawater4259 Місяць тому +1

    great video

  • @blktauna
    @blktauna Місяць тому +1

    LOL I have a bit of both TLT and SGOV so this is interesting thx!

  • @Velacreations
    @Velacreations Місяць тому +4

    I like the CLO etfs, they tend to have low correlation with the rest of the market, which is good for storing value

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +1

      I agree, and I'm always looking for new income sources with low correlation to existing ones.

  • @TravelingNomad100
    @TravelingNomad100 24 дні тому +2

    Good presentation but I am loaded up on JAAA and if I want the yield will dabble in EIC but cant justify the increase from JAAA to CLOZ

  • @WealthyChronicle
    @WealthyChronicle Місяць тому +1

    Love the idea of low volatility in CLOs, but is anyone else worried about the potential risks if the market panics? 🤨

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +1

      Given the lower default rate than corporate bonds, I think the biggest risk is price volatility during a correction, rather than a substantial change in income.

  • @international_dividend
    @international_dividend Місяць тому +1

    'zee'... You stayed too long in the States, mate. Yet another great, informative video.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +1

      You’re right! I thought about that. 90% of the viewers are in the US and don’t know what “Zed” is ;) will work on getting my accent back!

    • @international_dividend
      @international_dividend Місяць тому

      @armchairincomechannel Too right! I wanted to work in something about an act involving spiders but just couldn't figure out how to do so.

  • @TristanRailsback-c9c
    @TristanRailsback-c9c Місяць тому +1

    This is so funny I just bought some of CLOZ

  • @oneeyedjack8806
    @oneeyedjack8806 Місяць тому +1

    Got insight on MO? At a $1.02 a share and my current appreciation of 14.3% something must be in the weeds with this,,,,,,,,

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      Too much concentration in one company's ability to shift from an addictive product to a future that is unknown. I love the dividend history but the path to a new product that continues that amazing trend is unclear. I also don't like the unknowns associated with the regulatory environment in that sector. The government can change the taxes, disclosure warning requirements etc. If you follow the tobacco industry then perhaps you have an insight.

    • @oneeyedjack8806
      @oneeyedjack8806 Місяць тому

      @armchairincomechannel Regulations. That didn't even accur to me. Well
      thought out. Thanks!

  • @cometmall1
    @cometmall1 Місяць тому +1

    TV that even bigger than current TV...LOL

  • @drdontpassone8164
    @drdontpassone8164 Місяць тому +1

    legit guy...like his product

    • @drdontpassone8164
      @drdontpassone8164 Місяць тому +1

      did u buy cloz for your insider portfolio

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      Haven't bought CLOZ yet but I plan to add a small allocation soon. Will send out a new edition of Armchair Insider when I do.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      Thanks for watching!

  • @Coover90210
    @Coover90210 28 днів тому +2

    M2 is expanding at near 10%. Inflation at best around 3+ (and that's only if you believe govt numbers, which I don't ...) So ..."9%" from derivatives of derivatives is not that appealing to me.

    • @armchairincomechannel
      @armchairincomechannel  27 днів тому

      If you don't like a 9% yield but you have a better suggestion....I'm all ears.

    • @Coover90210
      @Coover90210 27 днів тому

      Well there is a relatively new, perfectly scarce asset which has achieved a 150% CAGR over its 15 year life. Over that same time span gold was 5% and SP was 12%. I will leave it to readers to take a guess and confirm those numbers for themselves. Many people I find would rather stick to their preconceptions than get wealthy, which is odd to me. Shrug.

    • @DM-dq9dl
      @DM-dq9dl 26 днів тому

      Digital tulip bulbs?

    • @Coover90210
      @Coover90210 26 днів тому

      @@DM-dq9dlyeah man tulip bulbs were replacing the Dutch guilder. If it was me I would study some history, learn what money is, question my own assumptions. But you do whatever works for you. I wish you well …my math stands.

  • @stevenhochman1
    @stevenhochman1 26 днів тому +1

    Why tell everyone if so good.

    • @armchairincomechannel
      @armchairincomechannel  26 днів тому +1

      I like sharing what I learn....the good, the bad, the risks, the opportunities. Not everybody wants to do that, but I enjoy the community of income investors associated with Armchair Income. They're a nice bunch of people.

  • @terrymoss663
    @terrymoss663 27 днів тому +1

    How does this compare with SEIX? Seems similiar.

    • @armchairincomechannel
      @armchairincomechannel  26 днів тому +1

      Yes, they both hold senior loans, but CLOZ uses CLO's which more clearly define the credit of the loans. CLOZ has outperformed SEIX for total return since its inception.

  • @chrisf1600
    @chrisf1600 28 днів тому +1

    Your average retail investor has no way of assessing the risks that are involved with these products, imho. There's a non-zero chance of losing your entire investment if the tranche gets wiped out with enough defaults. Calculating this probability requires knowledge of how the defaults are correlated and what's likely to happen to those correlations if the market suffers a downturn. That's something even the professionals struggle with. Tread carefully !

    • @armchairincomechannel
      @armchairincomechannel  27 днів тому

      The historical default rate for CLO's is less than 1% so I don't see "wiped out" as a likely outcome for the AAA or BBB tranches. As you move down the tranches of course the risk increases, culminating in the equity tranche which only gets paid after all the other tranches. I agree that caution is warranted but I think this investment class is worthy of consideration for income investors. If you're aware of an asset class with less volatility, higher yield, and less default risk....I'm all ears!

  • @ophirmayer1
    @ophirmayer1 Місяць тому +2

    Don't let any service access your brokerage account, are you insane

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +1

      I don't. I like to enter my trades manually. Helps me keep a mental track of what I'm doing and like you, I don't like to give my brokerage info out.

  • @MuzixMaker
    @MuzixMaker Місяць тому +1

    Fund is only a year old.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +2

      Yes, it's young. That's one of the reasons I'll start with a small allocation. JAAA and JBBB have a longer history. I'm also cautious about the recent change of management.

  • @paulfiedler9128
    @paulfiedler9128 Місяць тому +1

    Ah yes, the Cary Grant of Armchair investing is still out on safari and bringing meaty dividend stocks back to his hungry village. Thanks for your efforts.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +2

      Wow! I need to get a pair of high waist trousers and a dashing double breasted jacket to keep up that image :)

    • @paulfiedler9128
      @paulfiedler9128 Місяць тому

      @armchairincomechannel But only if it's in the Armchair Income budget. Then again, keep the golf shirt and casual wear. A double-breasted jacket and high-waisted trousers might alienate the meat-and-potatoes fixed-income crowd.

  • @jijiipetti1433
    @jijiipetti1433 Місяць тому +2

    Vomit Comet 😂😂😂!

  • @darrylprater8975
    @darrylprater8975 Місяць тому +1

    Curios that if rates continue to go down they will become less attractive. Yet in 2022 when rates were going up they became less attractive.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      That's a good question. It depends how you define "good". The prices move down slightly in 2022 for JBBB and to a lesser extent, JAAA (it barely moved). I don't know for sure, the cause of that mild correction (ie far less than the market) but I'm assuming it was the fearful sentiment during the bear market of 2022. Putting aside that minor price volatility, as rates rose in 2022 and 2023, CLO's became more attractive in that they delivered an increasing amount of income. If we define "good" as the income received, then high rates have been and will be better for CLO's than low rates.

  • @dakkon74
    @dakkon74 Місяць тому +1

    CLOs sound a bit like BDCs

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +1

      Both are in the floating rate loan world. BDC's underwrite, issue and manage their own loans individually and may take an equity position. CLO funds buy bundles of hundreds of loans that were created by others. Also CLO's are more specific about the credit ratings. Basically, BDC's are lenders and CLO's are investors in loans.

  • @TheAzmountaineer
    @TheAzmountaineer Місяць тому +1

    Bundled loans - isn't that what led to the great real estate crash of 2008? (Too many bad loans snuck into the bundles)

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      Sort of...the bundled mortgage loans led to the 2008 crash, specifically...Mortgage Backed Securities (MBS'). These loans are business loans...nothing to do with mortgages. Default rates for CLO's during the 2008 crash were very low.

  • @krakhour2
    @krakhour2 Місяць тому +1

    like iclo better

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      ICLO competes with JAAA or CLOX. I haven't done a deep dive on that one.

  • @fialee8
    @fialee8 Місяць тому +1

    CLOs and CDOs are EXACTLY the same thing... you do call out that the underlying debt instruments are different (mortgage loans vs business loans).

    • @danstevens64
      @danstevens64 Місяць тому

      Prove it

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      As I explained in the video, CDO's include mortgages, whereas CLO's hold business loans and not mortgages. They're not the same thing. If you'd like a more detailed breakdown of all the differences, see this article: www.vaneck.com/us/en/blogs/income-investing/clos-vs-cdos-understanding-the-difference/#:~:text=As%20a%20generic%20term%2C%20CDO,that%20invest%20in%20leveraged%20loans.

    • @fialee8
      @fialee8 Місяць тому

      @@danstevens64 A loan is a type of debt. Just as Mr Armchaired explained, these are bundled loans which are sold in "tranches" with varying degrees of credit risk/ratings. The only difference is that CLO are bundled business loans... and CDOs are bundled mortgages. It would not surprise me depending on who you are speaking with, they may use it interchangeably. An analogy maybe what's the difference between a taxi driver and an Uber driver? They are different, but essentially the same.

  • @BTCforce
    @BTCforce Місяць тому +1

    9% is treading water against inflation, u need better ROI to outpace inflation

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому

      You're welcome to share the income investment strategy that comfortably exceeds 9%/year. BTC delivers higher returns but during crypto winter it doesn't pay the bills. If you can sell enough at the top to last the winter then it could work.

  • @soju69jinro
    @soju69jinro Місяць тому +1

    I love yield rates of 8% or more.
    This makes me laugh when i see 5% on CD rates given by local banks. and wonder how many people are getting screwed.

    • @hirsch222
      @hirsch222 Місяць тому +10

      The big difference here is risk. Your bank CD is practically zero risk. The yield is guaranteed by the bank. Your balance will never go down, and even if the bank fails, the money is usually insured by the government (FDIC in the case of US banks, up to $250k)
      These high-yield funds carry risk. Your balance can go down. The yields are not guaranteed.
      Bank customers are not getting screwed. They are just taking less risk for lower returns.

    • @fialee8
      @fialee8 Місяць тому +5

      @@hirsch222 Explained very well. It's shocking how people think there's a free lunch, just laying around.

    • @armchairincomechannel
      @armchairincomechannel  Місяць тому +1

      Apples and oranges. Banks guarantee your capital and are backed by the FDIC. CLO's offer higher rates because they come with higher risk.