Angel Oak UltraShort Income ETF

UYLD

Market cap $1.25B

Constructing a stable income portfolio in today's volatile market favors CLO bond ETFs with strong yield and minimal drawdown. My recent portfolio revision removed underperforming or volatile funds, and adding top-performing AAA CLO ETFs and a diversified alternative. PAAA, CLOB, and UYLD are highlighted for superior total return, low drawdown, and attractive yield in their respective classes, with UYLD offering a near-treasury risk profile but higher yield.

UYLD continues to deliver a "cash plus" return, providing a significant spread (approximately 100 bps) over standard Treasury-only vehicles like BIL or TFLO. The fund has proactively shifted toward fixed-rate assets (now representing over 60% of the portfolio). Combined with a modest 0.7-year duration, this allows the fund to lock in higher yields. Despite its higher yield, the fund remains highly conservative, with over 96% of its holdings rated investment grade.

Angel Oak UltraShort Income ETF offers a 'cash plus' solution, targeting higher yield than T-Bills with ultra-short, actively managed fixed income. UYLD's portfolio emphasizes securitized credit—ABS, MBS, CLOs—plus high-quality corporate bonds, balancing extra yield with low volatility and short duration. Performance has outpaced comparable ultrashort ETFs, but in a rate-cutting environment, UYLD's yield advantage will gradually diminish as coupons reset lower.

UYLD offers a compelling yield enhancement, delivering about 1% over Fed Funds with a 5.2% SEC yield and low volatility. The ETF's portfolio is 96% investment grade, focused on securitized products like ABS, CLOs, and agency MBS, with a 0.7-year duration. UYLD demonstrated resilience during the April 2025 risk-off event, outperforming similar funds in its asset class with minimal drawdown.

UYLD invests in a wide assortment of cash alternative investments, including T-bills, high-quality CLOs, and short-term MBS. It yields 5.4%, a bit more than T-bills, with a bit more in volatility and risk. Risk-return seems somewhere between that of T-bills and AAA CLOs, perhaps a bit weaker than the latter.