2 Options to Capture the Complexity Premium in CLOs

In a Q2 Market Outlook Symposium with TMX VettaFi, and John Kim, CEO of Reckoner Capital Management, it was noted that collateralized loan obligation (CLO) ETFs have captured roughly $6 billion in inflows year to date1. One of the notions discussed in the symposium is the “complexity premium” tied to CLOs.“We think most people who do understand them love that complexity premium,” Kim explained. He noted that investors essentially capitalize on their understanding of an asset class not yet fully adopted by the retail investor market. See More: Exchange 2026: How ETFs are Democratizing the CLO MarketThe RAAA and RCLO EdgeAs individual investors seek higher yields without the risks associated with traditional fixed income assets like corporate bonds, the actively managed Reckoner Yield Enhanced AAA CLO ETF (RAAA ) and the Reckoner BBB-B CLO ETF (RCLO) emerge as compelling options. Not only do these funds provide the bridge between institutional strategies and retail investors, they seek to provide that complexity premium that Kim mentioned. For many investors, the primary barrier to entry for structured credit is a lingering misconception born of the 2008 financial crisis. Kim was quick to clarify that CLOs — backed by broadly syndicated corporate loans —have historically performed well through the crisis compared to subprime mortgages that were popular at the time. “AAA CLO bonds, for example, have never had a default in their 30+ year history2,” Kim noted, which speaks to the opportunity that RAAA presents to investors. RAAA focuses on the senior-most tranches, but works to add a strategic yield advantage compared to its peers. The fund employs leverage to seek to enhance its yield. That allows the fund, according to Kim, to "seek to outperform our unlevered peers " and also seeks to provide a “better proxy for corporate risk.” Investors desiring to move down the capital stack, aiming to achieve higher income, should take a closer look at RCLO. This mezzanine fund invests in Triple-B and BB-rated CLO bonds, which have higher yield potentials. Mezzanine tranches are naturally more sensitive to market shifts compared to AAA-rated debt. However, Kim emphasized the security of the broadly syndicated loan market. In contrast to private credit headlines causing anxiety in the 24-hour financial news cycle. RCLO takes a differentiated approach by focusing on liquid, bank-underwritten loans.The Active EdgeBoth funds are actively managed. RAAA and RCLO access the expertise of Reckoner Capital’s portfolio managers to seek to benefit from the complexity premium.  The managers have experience in how to navigate the CLO market in any macro environment.  Indeed, Reckoner Capital has deep expertise and operates as specialists in the nuanced CLO market. As the CLO ETF market sees greater adoption, Kim’s outlook is clear. CLOs are becoming less of a niche, satellite position. By replacing traditional corporate exposure with the floating-rates and higher relative yield potential found in RAAA and RCLO, advisors can implement a “better policy” for credit risk in a higher-for-longer rate environment.For more news, information, and analysis, visit the Market Insights Content Hub.Important InformationA prospectus and a summary prospectus which contains this and other information about the fund may be obtained by visiting https://funds.reckoner.com/assets/pdfs/RAAA-RCLO-Prospectus.pdf or call 212.597.2500. Please read each prospectus carefully before investing. Each fund’s principal investment risks include all or some of the following risks: 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 each 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 Source: Bank of America Global Research, “CLO Factbook,” 5/15/2026 2 Bank of America Research, “CLO Factbook,” 5/30/2025