2024-03-28 01:35:28 ET
Summary
- Pacer Pacific Asset Floating Rate High Income ETF has delivered outstanding results since our initial coverage of the name.
- FLRT is a low-duration instrument with a collateral pool consisting of leveraged loans and CLOs.
- The fund contains embedded leverage in the form of BB-rated CLO tranches, making it riskier compared to simple leveraged loan funds.
- With high yield spreads at historic lows, FLRT is no longer an attractive buy, but its 9% yield makes it a viable fund to hold until the Fed starts cutting rates.
Thesis
About eight months ago we started covering a very interesting fund from Pacer, namely the Pacer Pacific Asset Floating Rate High Income ETF (FLRT). At the time we were still in the midst of Fed rate hikes, and the fund's collateral was very attractive for the macro cycle - namely the vehicle contained floating rate loans and CLOs, which are low duration assets....
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For further details see:
FLRT: No Longer An Attractive Entry Point (Rating Downgrade)