The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  VanEck CLO ETF to a Morningstar Medalist Rating of Neutral.  The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The strategy’s management team earns a Below Average People Pillar rating. The strategy earns an Average Process Pillar rating.  The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Morningstar's evaluation of this fund's process seeks to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage. VanEck CLO ETF earns an Average Process Pillar rating.    The leading factor in the rating is the firm's five-year retention rate of 83% over the period. A reasonable level of diversification across individual securities also supports the rating. The fund's top 10 holdings account for 31% of assets. Lastly, the process is limited by its parent firm's subpar risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 2.6 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

 Compared with other funds in the Ultrashort Bond Morningstar Category, this fund consistently took on similar credit risk over the past few years. Opening the analysis to additional factors, the portfolio has displayed biases over time, whether towards or away from certain fixed-income instruments. Compared with the category average, the managers have been meaningfully underweight corporate debt in recent years. In the latest month, the strategy has also relatively underweighted corporate debt compared with Morningstar Category peers. Additionally, there's been a notable underallocation from A rated bonds over the past few years. Similarly, in recent months, the strategy also had less exposure to A rated bonds than peers. Finally, during the past few years, the fund leaned meaningfully towards debt with 10- to 15-year maturities. In this month, the strategy also leaned more towards debt with 10- to 15-year maturities compared with its peers.

 This strategy has a 5.8% 12-month yield, higher than its average peer's 4.8%. In addition, it has a 6.8% 30-day SEC yield (a standardized, point-in-time estimate of the fund’s future income return). Higher yields tend to indicate higher credit risk. The portfolio has a lower average surveyed credit quality of BB, compared with the typical peers' A and it holds no non-investment-grade assets, despite the average peers' 3%. Strategies with more credit risk may have a higher return, but they are riskier.

Average

Process

VanEck CLO ETF earns a Below Average People Pillar rating. Francis G. Rodilosso, the longest-tenured manager on the strategy, provides strong guidance, bringing forward 20 years of listed portfolio management experience. The average Morningstar Rating of the strategies they manage is 3.7 stars, demonstrating above-average risk-adjusted performance versus category peers. Francis G. Rodilosso has an experienced listed co-manager. Together, they average 15 years of listed portfolio management experience.  The highest personal investment by either manager is less than $10,000. That is too low to promote alignment of their interests with the fund's investors.

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

Below Average

People

VanEck’s ownership structure and specialization make it unique among industry peers. The firm’s founding family and namesake still have control, and its product lineup still reflects its legacy as a specialist in niche market segments. VanEck earns an Average Parent Pillar rating. 

Founded by John van Eck in 1955, the firm staked its claim in the industry by capitalizing on burgeoning markets. Starting with the opening of Western Europe to U.S.-based investors in the wake of the Marshall Plan, VanEck’s largest and most successful products provide exposure to areas of the market that are off the beaten path, such as hard assets, emerging-markets debt, and below-investment-grade-rated corporate debt.

Through its history, VanEck has taken an opportunistic approach to product development. For instance, since 2018, VanEck has launched strategies that provide exposures ranging from international REITs to companies involved in video game development. Regardless of where their reach takes them, however, VanEck builds a case that the strategy will be relevant over the long term and that its risks must be easy to understand. However, not all its products catch on, and the firm has shuttered several offerings in the last decade. 

VanEck remains a privately held firm, wholly owned by CEO Jan van Eck and his family. Although this enables the firm to focus on the long term and the firm offers some employees participation in profits, the firm hasn’t used equity as a recruiting and retention tool and introduces some key-person risk in the executive suite.

Parent

Vaneck CLO ETF

CLOI is actively managed to invest in collateralized loan obligations (CLOs) of any maturity. While targeting USD-denominated high-quality CLOs, the fund may still hold high-yield bonds in foreign currency.

NEW YORK--(BUSINESS WIRE)--VanEck announces its CLO ETF and the firm's Trends with Benefits podcast won awards at the 2023 With Intelligence ETF & Mutual Fund Ceremony.

VanEck's CLO ETF Named Newcomer Fixed Income ETF of the Year by With Intelligence

The VanEck CLO ETF (CLOI) has provided a steady dividend yield and low volatility in 2023, with a 30-day SEC yield of 6.4% and a 2% standard deviation. CLOI is expected to continue extracting high, safe yields from senior CLO tranches, with a projected total return of 7.5% for 2023. The CLO and leveraged loan market has seen rising default rates, but AAA CLO spreads are expected to stay rangebound in the near term, with increased demand from banks and overseas investors.

CLOI:  An Incredible Sturdy Way To Navigate 2023, 6.4% Yield

By William Sokol, Director of Product Management What Is a Collateralized Loan Obligation (CLO)? A collateralized loan obligation (CLO) is a portfolio of predominantly senior secured loans that is securitized and actively managed.

A Guide to Collateralized Loan Obligations (CLOs)

Portfolio positioning and security selection were key performance drivers for the VanEck CLO ETF in Q1 as the Fund outperformed the J.P. Morgan CLO Index.

Safe and Smart Playbook Helps CLOI Outperform in Q1

Safe And Smart Playbook Helps CLOI Outperform In Q1.

Safe And Smart Playbook Helps CLOI Outperform In Q1

VanEck's senior product manager Bill Sokol spoke with NYSE's Judy Shaw “about finding attractive income without taking excessive risk.” “That's something that income investors are always grappling with,” Sokol said at Exchange 2023.

NYSE's ETF Leaders: VanEck's Bill Sokol

VanEck CLO ETF gives retail investors exposure to investment-grade CLO tranches. CLOs have historically performed better than similarly rated bonds and loans.

CLOI: Exposure To CLO Asset Class

With inflation still residing at multi-decade highs, the Federal Reserve may have no choice but to continue raising interest rates, though potentially in less aggressive fashion than last year. Still, higher interest rates can potentially pinch an assortment of income-generating asset classes, prompting advisors and investors to consider alternatives.

CLOI Credible Source of Unique Income

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Where is VanEck looking this year? One major area for the busy ETF shop is collateralized loan obligations (CLOs) according to VanEck director of product management Bill Sokol, available in the VanEck CLO ETF (CLOI).

VanEck's Sokol on Firm's “Unique” CLOI Arrangement

The VanEck CLO ETF outperformed the J.P. Morgan CLO Index in the fourth quarter by 0.13%, and since launching in June 2022 has outperformed by 0.57%, driven by both portfolio positioning and security selection. The Fund returned 3.16% in the quarter ended December 31, 2022, outperforming its benchmark, the J.P. Morgan CLO Index, by 0.13%.

CLOI Outperforms In Q4, Stays Defensive Amid Uncertainty

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Due to rising interest rates, income investors face plenty of challenges in 2022 as aggregate bond funds have endured double-digit declines. Some corners of the bond market performed less poorly, others were worse, but the bottom line is that bonds failed investors this year.

Pair of Unique Income Sources Could Deliver in 2023

CLOI is an exchange traded fund focused on CLO debt. The fund is composed of AAA / AA and A tranches, with an overweight positioning in AA tranches.

CLOI - A Nice 5.8% Yield With Limited Credit Risk

In sports, it's often said that the best offense is a strong defense. That saying has relevance in financial markets, particularly in turbulent environments such as 2022.

Defense Was Good Offense for CLOI in Q3

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As we consider the current market environment, investors can use collateralized loan obligations and floating-rate notes related ETF strategies investments to diversify their investment portfolios today.

2 ETF Strategies for Income Investors in a Rising Rate Environment

Looking for a way to diversify your fixed-income portfolio toolset? Collateralized loan obligations, or CLOs, could provide attractive yields relative to similarly-rated bonds and loans.

Rise Above Rising Rates with CLOs and FRNs

By Fran Rodilosso Head of Fixed Income ETF Portfolio Management In the current environment, CLOs may provide an attractive return opportunity among credit assets, with demand remaining robust.

CLOI Defensive Positioning Drives Q3 Outperformance

By William Sokol Director of Product Management Rising rates have driven volatility in the leveraged loan market. We believe CLOs offer attractive access to loans in this environment, given their structural risk mitigation.

CLOs: A Better Way to Access Leveraged Loans

Collateralized loan obligations (CLOs), which are securitized pools of leveraged loans, have long been the territory of professional traders and hedge funds, but thanks to exchange traded funds, the asset class is now accessible to investors of all stripes. The VanEck CLO ETF (NYSE Arca: CLOI) is certainly part of the discussion.

Consider CLOs for Credit Quality, Income

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Most bread-and-butter income sectors took significant losses this year and this includes high-quality sectors like investment-grade bonds which normally outperform in weakness. In this article, we highlight a trio of niche and overlooked income sectors: CLO debt, asset-backed securities, and non-agency residential mortgages.

Attractive Income Opportunities In Niche And Resilient Sectors

Persistent inflation is highlighting investors' income needs, but surging interest rates are making life difficult for fixed income investors. Those scenarios underscore the need for market participants to consider unique income-generating strategies while maintaining favorable risk profiles.

Make the CLO Call for Added Income

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It's been a wild market for investors. But fund issuer VanEck thinks it's providing investors with the best ETFs and mutual funds to navigate the volatility.

VanEck's ETF Head Says There's No Excuse For Missing Key Themes

As we consider the current market environment, fixed-income investors can turn to collateralized loan obligations, or CLOs, exchange traded fund strategies to diversify their portfolios.

An Alternative Fixed-Income ETF Idea to Limit Rate Risk, Generate Yields

With higher relative yields, a history of strong risk-adjusted returns, and protection against rising rates, there is a strong case for a strategic allocation to collateralized loan obligations (CLOs) within an income portfolio.

CLOs: Lower Duration Risk and Pick Up Yield

Interest rates are rising, crimping a variety of income-generating assets in the process. However, real yields aren't satisfactory, putting some income investors in a bind.

Consider CLOs for Unique Income Opportunities

VanEck today announced the launch of the VanEck CLO ETF (NYSE Arca: CLOI), an actively managed exchange traded fund designed to provide exposure to the $1 trillion collateralized loan obligation market. The fund is subadvised by PineBridge Investments, a private global asset manager focused on active, high-conviction investing.

News for Vaneck CLO ETF ETF (CLOI)