A $100,000 portfolio split between SGOV, JAAA, and CLOZ generates $465 in monthly income, leveraging floating-rate CLO coupons to minimize duration risk while capturing higher yields than traditional Treasury bills.
CLOZ provides the highest yield from lower-rated BBB-B CLO tranches but carries materially higher credit risk despite low duration.
SGOV is described as the low-risk Treasury bill component generating roughly $113 monthly per $33,333, with minimal duration risk and lower yield.
JAAA offers higher income from AAA-rated CLO tranches with floating-rate coupons and low duration, but adds credit risk compared to Treasuries.
Investors can generate a 5.6% blended yield by splitting $100,000 equally between SGOV, JAAA, and CLOZ. This strategy avoids dividend stocks and interest-rate sensitivity by utilizing Treasury bills and floating-rate collateralized loan obligations (CLOs) to maintain low duration while scaling up the credit risk ladder.
The portfolio utilizes Treasury bills in SGOV and floating-rate CLO coupons in JAAA and CLOZ, which keeps the effective duration near zero and minimizes sensitivity to long-term interest rate swings.
While CLOZ offers the highest yield in the portfolio, it carries materially higher credit risk because it invests in lower-rated BBB to B tranches, which may face price declines during economic downturns.