CLO Equity Funds Stocks Continue to Improve as March NAVs Stabilize – Stocks are up as much as 21% in the last month.

CLO Equity Funds have performed well over the last month - up between 6% - 21%.

CLO equity funds’ NAVs somewhat stabilized in March, with projected change in the fair value of investments down between (1.9)% - (8.7)%, which was a drastic improvement from overall Q1 reductions of between (10.1)% - (31.9)%.  EIC’s and XFLT’s Q1 2026 NAVs of (10.0)% and (16.5)% were down the least.  This make sense since EIC's largest investment is in BB CLO debt (65%) and XFLT's largest investment is in broadly syndicated loans (just under 50%). Leverage Loans and BB CLO debt valuation have generally held up during 2026. However, these two funds’ stocks trade with the largest discounts to current NAVs (except OCCI – 20%).  Most of the other funds have trade close to their current or projected NAVs. 

The stocks are off their recent 52-week lows and have posted positive 1 month stock returns of between 3.82% - 21.21% and trade with forward yields of 13.36% - 24.63%.  Fingers crossed but I think the worst is over for CLO equity funds and these funds will continue to slowly recover. 

Once CLO equity prices stabilize, pure play CLO equity funds should trade with NII yields of between 12% - 18%. While EIC and XFLT, hybrid funds, should trade with NII yields of between 10% - 15%.  So, for example, if ECC’s Q1 2026 NII is $0.22, then the stock should trade between $7.30 - $4.88, which would represents an upsize of between 82% - 22%, while paying an 18% dividend.  This is a simplistic back of the envelop calculation to illustrate that these funds offer true value with potential upsize.

I will publish a detailed report on each fund once they publish their Q1 2026 financial results.