Why Active Management Is Non-Negotiable for CLOs

Investor interest in collateralized loan obligations (CLOs) continues to expand in 2026. TMX VettaFi caught up with Reckoner Capital co-CIO Tim Wickstrom at ETF Exchange 2026 to get a pulse on the CLO ETF market, which is demanding an active mandate.As Wickstrom noted, the market for CLO ETFs already surpassed the $40 billion mark1 earlier this year. The number of assets continue to grow as more investors look towards CLOs as an income diversification tool to seek greater yield in an uncertain fixed income market. As the number of ETFs continue to proliferate in this burgeoning space, some investors might be wondering if they can simply buy an index in order to capture this opportunity. The simple answer is “no.” See More: Beyond AAA: RCLO Is a Strategic Yield Play in 2026Why Passive Won't SufficeBecause of their rising popularity, many large ETF providers are rushing to launch CLO products to meet investor demand. However, as Wickstrom noted, this isn’t an asset class reserved for surface-level understanding. Unlike the S&P 500 for equities or the Aggregate Bond Index for bonds, there is no passive benchmark to replicate that can capture CLO exposure. “There is no real replicable index that someone could buy to just get exposure to CLOs,” Wickstrom reiterated. “You have to be active.” In short, CLOs aren’t a set it and forget it asset class. Because of the structural complexity of the underlying loan pools in CLOs, it requires portfolio managers who have the requisite knowledge and understanding of these structured products. “These are highly complex and nuanced structures,” Wickstrom confirmed. “So you need someone who knows how to read the documents and understand that.”Reckoner Capital: Specialists in CLOsIn a crowded ETF marketplace, Reckoner Capital is well aware of their identity. They’re not another provider scrambling to release CLO ETFs en masse because the market demands it. They’re specialists in their field who understand the idiosyncrasies of CLOs. Their Reckoner BBB-B CLO ETF (RCLO) is a prime example of this specialization at work. As a CLO specialist, the firm can identify structural cushions that standard corporate bonds lack. “In CLOs, if you buy a Triple B or Double B, you actually have equity cushion underneath you,” Wickstrom explained. “If one name gets wiped out in the CLO, the equity gets hit before you do.” Another example of their specialized products is the Reckoner Yield Enhanced AAA CLO ETF (RAAA ). The fund utilizes a modest “levered play” strategy that’s typically reserved for banks and hedge funds. This involves pledging senior securities to seek to capture additional yield without taking on “three or four times” leverage. In the end, Reckoner Capital’s ETF suite is designed to bring institutional-grade tools to retail advisors. Wickstrom views Reckoner Capital as an “alternative credit manager that has an ETF product,” rather than “an ETF manager that has an alternative credit product.” It’s this type of specialist approach that can help navigate a year that’s already been defined by market uncertainty. Click here to view Reckoner Capital’s entire ETF suite. For more news, information, and analysis, visit the Market Insights Content Hub.*Credit ratings are assigned by Nationally Recognized Statistical Rating Organizations (NRSROs) on a typical credit rating scale that ranges from AAA (highest rating) to D (lowest). “Triple B” (BBB) and “Double B” (BB) refer to investment-grade and below-investment-grade ratings, respectively, reflecting the relative creditworthiness or risk of a security or issuer. For more information on credit ratings, please click here. Important Information Carefully consider the fund’s objectives, risks, charges, and expenses before investing. The prospectus at each of the links above 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 CLO Factbook," 5/15/2026