Investors Shift Toward CLOs Amid Private Credit Repricing
Recent scrutiny in the private credit market has led to a repricing of risk rather than an exodus, with particular concerns centered on software and tech-enabled services. John Kim from Reckoner Capital Management emphasizes that this is not indicative of a systemic collapse but reflects a strategic reallocation toward higher-quality structures like collateralized loan obligations (CLOs). CLO loans are positioned at the top of capital stacks, offering structural seniority which provides resilience against volatility in lower-tier credit tranches. Investor behavior supports this shift: over $6 billion has flowed into CLO ETFs so far this year. Actively managed funds such as Reckoner's RAAA and RCLO are attracting attention for their flexibility and expertise, offering exposure to AAA-rated and mezzanine-tranche CLO portfolios respectively. These ETFs provide daily liquidity and transparency that traditional private credit lacks. Reckoner has launched two new CLO ETFs—RAAA and RCLO—to meet growing demand in the space.
Topics: CLOs (collateralized loan obligations) ETF trends private credit risk repricing