Repricing, Not Retreating: The Strategic Migration to CLOs

When it comes to investing in alternative markets, the private credit market has been garnering attention in recent years. However, a “software selloff” combined with transparency concerns have some investors questioning the space. However, this isn’t a broad market exodus, but rather, a “repricing of risk.” As TMX VettaFi Senior Industry Analyst Kirsten Chang noted, the primary concern is isolated to software and tech-enabled services. Can this localized pressure in corners of the opaque, illiquid credit markets spill over into collateralized loan obligations (CLOs)? The simple answer is no.See More: RCLR: A Disciplined Approach to BBB-B CreditRepricing Over ResetAccording to John Kim, Co-Founder and CEO of Reckoner Capital Management, the scrutiny that private credit is facing is less about a systemic collapse. Instead, the narrative is centered on a surgical focus on specific areas—such as software—that may deliver subpar returns. “The real story isn’t a broad market collapse, but a fundamental repricing of risk,” Kim explained. “We have moved into an environment where collateral quality and structural seniority are the primary drivers of performance, rather than market beta.” Kim notes that the loans that are found within the structures of CLOs are uniquely positioned to weather this storm. That’s because these loans predominantly sit at the top of the capital stack, emphasizing greater quality. This structural seniority acts as a buffer against the volatility found in lower-tier private credit tranches.ETF Wrapper FlexibilityThe shift towards higher quality is evidenced by investor behavior. As Chang noted in her analysis, the category of CLOs and their ETFs has attracted net new capital to the tune of over $6 billion thus far this year1. This trend underscores a growing reliance on the ETF wrapper, especially those that are actively managed like RAAA and RCLO. “The flows we are seeing into CLO ETFs confirm that investors aren’t retreating, but they may be reallocating toward higher-quality structures,” Kim confirmed. On that note, Reckoner recently launched a suite of CLO ETFs, including the Reckoner Yield Enhanced AAA CLO ETF (RAAA ) and the Reckoner BBB-B CLO ETF (RCLO). Each fund presents two distinct opportunities for investors seeking CLO exposure: RAAA: Designed for investors seeking institutional-grade credit2 at the top of the aforementioned capital stack. It provides leveraged exposure to a diverse portfolio of AAA-rated CLOs, prioritizing structural seniority and enhanced yield potential. RCLO: This fund targets the mezzanine tranches (BBB- and BB-rated), which offer investors a balance of capital preservation and higher income potential. The inherent benefits of the ETF infrastructure include daily liquidity and transparency that traditional private credit often lacks. By utilizing actively managed funds like RAAA and RCLO, investors can gain credit exposure with the flexibility to act when private markets cannot while utilizing the deep CLO expertise of Reckoner Capital’s portfolio management team. For more news, information, and analysis, visit the Market Insights Content Hub. Important Information Carefully consider the fund’s objectives, risks, charges, and expenses before investing. The prospectus at www.reckoner.com/raaa and www.reckoner.com/rclo provides the full details. Read it carefully before investing. Investing involves risk including the risk of principal loss. The fund’s principal investment risks include management risk, novel structure risk, affiliated fund risk, collateralized loan obligation risk, non-diversified fund risk, new fund risk, leverage risk, and liquidity risk. For additional information about these and other fund risks, please refer to the “Principal Investment Risks” section of the prospectus. ETFs may trade at a premium or discount to NAV. Shares of any ETF are bought and sold at market prices (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Past performance is no guarantee of future results. Collateralized Loan Obligations (“CLOs”) are structured products that issue different tranches, with varying degrees of risk, which are backed by an underlying portfolio consisting primarily of below investment grade corporate loans. Investments in CLOs presents risks similar to those of other credit investments, including interest rate risk, credit risk, liquidity risk, prepayment risk, and the risk of defaults of the underlying assets. Distributor: Quasar Distributors, LLC. 1 Bank of America Global Research, “CLO Factbook,” 5/29/2026 2 RAAA is an actively managed strategy that each invests exclusively in NRSRO rated debt tranches of AAA-rated CLO bonds (through direct or indirect exposure), utilizing bottom-up credit analysis focused on CLO manager track records, structural seniority, and relative value potential. The strategies each exclude CLO equity, maintain floating-rate exposure, and applies institutional underwriting standards