In a recent episode of “Behind the Ticker,” Danielle Gilbert, head of business development at Panagram, discusses her career path and the innovative structured credit solutions offered by Panagram. Gilbert, who began her career in structured credit at UBS and later worked at Eldridge, where she met the Panagram team, provides a deep dive into the complexities and benefits of structured credit and CLOs (collateralized loan obligations). Panagram, launched in 2021, leverages its expertise in structured credit to offer institutional-grade investment strategies to a broader audience through ETFs.
Gilbert explains that structured credit involves creating diversified pools of contractual cash flows from various assets like mortgages, credit cards, and corporate loans. CLOs, a subset of structured credit, bundle senior secured loans from large corporations into different tranches of bonds with varying risk levels. These tranches, ranging from AAA to equity, offer investors tailored risk and return profiles. Unlike the subprime mortgage products that contributed to the 2008 financial crisis, CLOs are backed by higher quality, senior secured loans with historically low default rates and high recovery rates.
Panagram manages about $17 billion in assets, with more than half invested in CLOs. Their investment approach focuses on high-quality CLO managers and active management to optimize returns. Gilbert highlights that CLOs offer floating rate exposure, providing a hedge against rising interest rates and adding diversification to fixed income portfolios. The two ETFs Panagram launched in 2023, CLOZ and CLOX, provide different levels of exposure to CLO tranches. CLOZ focuses on BBB and BB tranches, offering higher yields around 9%, while CLOX targets AAA tranches for more conservative investors.
Gilbert emphasizes the importance of education in promoting these products to advisors and individual investors unfamiliar with structured credit. Panagram’s strategy includes educational seminars, webinars, and one-on-one discussions to demystify CLOs and highlight their benefits in portfolio diversification and income generation. By providing access to institutional-grade CLO investments through ETFs, Panagram aims to offer investors better yield opportunities with strong historical performance and lower correlation to traditional fixed income and equity markets.