FCLO vs PAAA

FCLOCFidelity CLO ETF

PAAAAPGIM AAA CLO ETF

In short

FCLO Most CLO ETFs hug the AAA tranche. FCLO goes down the stack, putting the majority of assets in CLOs rated BBB+ to B-, the mezzanine and junior slices, with its fee waived to zero through January 31, 2027 (0.45% gross after).

PAAA PGIM's entry in the AAA CLO race: an actively run book of the senior-most slice of collateralized loan obligations, floating-rate, priced at 0.19%, paid out monthly. Same playbook as the category's biggest names, a hair cheaper.

Stated mandate

FCLO The fund seeks to generate income and normally invests at least 80% of its assets in collateralized loan obligations (CLOs).

PAAA The Fund seeks to maximize total return through current income and capital appreciation. It invests primarily in U.S. dollar-denominated AAA-rated CLOs and is actively managed rather than designed to replicate a specific index.

Why people hold it

• FCLO Rare down-the-stack build: most assets sit in CLOs rated BBB+ to B-, the mezzanine and junior tranches, while category leaders CLOA, JAAA and PAAA stay in AAA.fidelity.com
• Fee waived to zero through January 31, 2027, against 0.20% at CLOA and JAAA and 0.19% at PAAA, and below the category median.
• Active mandate with room to roam: at least 80% in CLOs, plus higher-rated tranches, middle-market (private credit) CLOs and other structured products.fidelity.com

• PAAA At 0.19%, one of the cheapest tickets into AAA CLOs, undercutting the 0.20% charged by CLOA, JAAA, FAAA and ACLO and sitting well below the category median.
• Keeps at least 80% of investable assets in US dollar CLOs rated AAA at purchase, the tranche that stands first in line for cash from the underlying loan pool.mutualfunds.compgim.com
• CLO coupons float, so the income stream resets with short-term rates rather than locking to a fixed coupon. Cash goes out monthly.pgim.com
• A multi-billion-dollar fund that trades actively, with spread and execution behavior among the strongest in its peer group.

Worth knowing

• FCLO Mezzanine and junior tranches sit behind AAA in the waterfall, so loan losses reach them first. Fidelity's own materials flag more volatility and risk with the higher income.fidelity.com
• When the waiver ends on January 31, 2027, the 0.45% gross fee applies, above CLOA and JAAA at 0.20% and PAAA at 0.19%.
• A 2026 launch still building scale and trading volume, so spreads can run wider than at the category's long-tenured AAA funds.

• PAAA Actively managed against the JP Morgan CLOIE AAA Index, not built to match it. Holdings and results can diverge from the benchmark by design.
• The AAA stamp sits atop a pool of leveraged loans to below-investment-grade borrowers, and up to 20% of investable assets can go outside AAA-rated CLOs.mutualfunds.com
• Launched in 2023, so the track record is short and does not yet span a full credit cycle.

Full FCLO profile⁠

Full PAAA profile⁠