PAAA vs RAAR

PAAAAPGIM AAA CLO ETF

RAARDReckoner Yield Enhanced AAA CLO Reinvesting ETF

In short

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.

RAAR Most AAA CLO ETFs exist to spray income at you every month. RAAR is the odd one out: an actively managed AAA CLO fund that aims to distribute just once a year, letting interest stack up inside the wrapper instead.

Stated mandate

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.

RAAR The Fund is an actively-managed ETF that seeks total return by investing in AAA-rated debt tranches of collateralized loan obligations (CLOs), while aiming to limit dividend or income distributions to once per year.

Why people hold it

• 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.

• RAAR The rare accumulator. It aims to limit distributions to once a year, so CLO interest builds inside the fund instead of landing in your account twelve times a year.
• Exactly what the name says: AAA-rated CLO debt tranches, the senior slice of the loan securitization stack, picked by an active manager rather than tracked off an index.
• Built around the same AAA CLO strategy as its sibling RAAA, with the payout switch turned from routine income to an annual event.

Worth knowing

• 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.

• RAAR It charges 0.40% a year. The typical AAA CLO ETF sits near 0.25%, and the category's largest names (JAAA, CLOA, PAAA) run about 0.20%.
• Launched in late 2024 and still a small, thinly traded fund, so bid-ask spreads can run wider than the category's heavyweights. Limit orders matter here.
• The once-a-year cadence is a stated aim, not a promise, and by design there is no monthly cash landing in your account from this fund.

Full PAAA profile⁠

Full RAAR profile⁠