Inside the Rise of CLO ETFs and What Sets RAAA Apart

RAAA: What It Is and How It Works

The Reckoner Leveraged AAA CLO ETF (RAAA) provides exposure to AAA-rated tranches of collateralized loan obligations, the most senior and historically most stable layer of the CLO capital structure. These tranches pay floating-rate coupons tied to short-term interest rates, offering potential income that adjusts as rates change.

To enhance income potential, the fund employs up to 50% leverage, financed through short-term repurchase agreements.

This leverage is actively managed, allowing the portfolio team to adjust exposure based on market conditions — scaling it back in periods of volatility and increasing it when conditions are more stable.

Portfolio construction focuses on manager selection within the CLO market, using a data-driven process that evaluates the track record, process, and risk management practices of the underlying CLO managers. Risk controls, including hedging and scenario analysis, are part of the strategy to manage potential downside.

Why RAAA is Different

RAAA differentiates itself from other CLO ETFs by combining a strict focus on AAA-rated tranches with an explicit leverage cap and an active, dynamic management approach.

This combination is designed to offer a balance of floating-rate income and capital preservation while acknowledging that leverage introduces additional risks, including magnified losses and liquidity considerations.

“What is unique about RAAA is that we draw upon our longstanding industry relationships to select attractive, senior AAA CLO bonds, which seek to offer a high degree of capital preservation, and utilize reverse repurchase agreements to create leverage to provide investors with potentially higher yields relative to unlevered AAA CLO bonds.” - John Kim, Co-Founder and CEO, Reckoner Capital Management.

The fund launched on July 9, 2025, trades on the NYSE, has an expense ratio of 0.30%, and distributes income monthly. As of September 2, its reported distribution yield was 5.43%, and the 30-day SEC yield was 5.62% though these figures will vary over time.

About Reckoner Capital Management

Reckoner Capital Management is a global asset management firm with specialized expertise in alternative credit. The firm is dedicated to delivering superior investment performance to institutional and retail clients by creating bespoke, innovative solutions and products that are directly aligned with their objectives. Leveraging their vast experience, expertise, and relationships, Reckoner brings highly differentiated alternative credit investments to Main Street, which has traditionally had limited access to this asset class.

The firm is employee-owned and backed by RedBird Capital Partners, a $12 billion private equity firm. Their first fund – RAAA – is an actively managed exchange-traded fund designed to provide capital preservation through a diverse portfolio of AAA-rated CLO bonds combined with the potential for enhanced yield through the use of leverage.

Important Information

An investor should consider the investment objectives, risks, and charges and expenses of the fund carefully before investing. A 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/Reckoner-Prospectus.pdf. The prospectus and the summary prospectus should be read carefully before investing.

The performance data quoted represents past performance. Past performance does not guarantee future results. The investment returns and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For month end performance, please click here www.reckoner.com/raaa.

The Reckoner Leveraged AAA CLO ETF is different from most funds in that it seeks leveraged returns, which makes it riskier than funds that do not use leverage. Periods of higher market volatility may affect the fund’s return more than the returns of funds that do not use leverage. Accordingly, the fund may not be suitable for all investors and should be used only by knowledgeable investors who understand the potential consequences of seeking leveraged investment results. Shareholders should actively manage and monitor their investments.

Investing involves risk, including the risk of principal loss. The Fund is “non-diversified”, meaning that it may invest a relatively high percentage of its assets in a limited number of issuers.

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.

The fund’s investment in debt securities may subject it to liquidity risk, interest rate risk, floating-rate obligations risk, call risk, and extension risk. Past performance is not necessarily indicative, or a guarantee, of future results and there can be no assurance that Reckoner or any fund, product, or strategy provided or managed by Reckoner will achieve comparable results, or that any investments made by Reckoner in the future will be profitable.  Fund investing involves risk. Principal loss is possible.

Distributor: Quasar Distributors, LLC.

FURTHER INFORMATION

Please visit: reckoner.com

Or contact:info@reckoner.com

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.