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 began her career in structured credit at UBS and spent 18 years on the sell side. In that role, she met the investment team at Eldridge. Panagram 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.
About Danielle Gilbert and Panagram
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.
Investment Strategy and Approach
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.
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and Danielle Gilbert covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
And they're putting that into like an income portfolio. And they set that as their baseline and then they adjust it as they see fit, based on their views on where credit risk is. And then I've seen investors that are more conservative that really want 100% exposure to just pure play, CLO triple A's. Now, I don't know if you're familiar with this step, but there are 10 CLO ETFs in the market today. The first one was created in October of 2020.
It could be a third component we talked about yield resilience, but third is just less correlated. And that's both triple B, double B risk and the triple A risk. We've seen, listen, I've seen it allocated in a lot of different ways. So I've seen investors use CLO Z as a high yield replacement. So that could be either high yield, traditional high yield, or they're replacing their loan exposure and getting exposed to an triple B double B. But I've also seen an investors do a barbell approach where they maybe have 50% exposure to CLO Z and 50% exposure to CLO X.
Market Context and Positioning
But it was actually, well, time because that market has grown to what it is today, which is very institutional, but I had a front seat to that growth. So my role was, as a salesperson, covering portfolio managers, sophisticated portfolio managers, that had pools of capital that they were allocating to structured credit. So I was in pre-GFC, during the GFC post, along career in that type of opportunity of settling and covering those types of sophisticated clients. Now, it was in that role that I met the panogram team, so they were working at Eldridge, investing capital on behalf of Eldridge and the affiliated balance sheet.
So the 10 largest stocks in the index by market capitalization, which is mostly obviously the tech giants, have posted a median gain of 17%, while the rest have lost 1.3%. So on the equity side, you're already pretty heavily indexed to a few names, but then on the fixed income side, I think what's happening just to relate it back to that is you're heavily indexed to duration risk. Most of the 40% is fixed rate. And I think a lot of people have been getting off sides for not only because of the increased correlation because they've been taking on, look at we saw the regional banks.
So, Panogram is a specialized structured credit asset manager. They manage about 17 billion in assets, 16.8, rounding up, and more than half of that is in CLO related investments. We're big investors in CLO bonds and CLO equity. We're not a CLO manager, it's very important distinction. We actually specialize in investing in the management of CLO, so the structure. And the team, the investment team has been working together since 2014. They first started when Eldridge was being formed, managing the assets for Eldridge and the affiliates.
Notable Insights
"We're just new to the outside world, so I jumped on the opportunity and started when we pretty much launched in 2021 to that side of the world in the fall of 2021."
"And the whole point was, you can learn anything, even complex things, you can teach yourself, it's available, and it was actually a big hit."
Key Takeaways
- Panagram provides a deep dive into the complexities and benefits of structured credit and CLOs (collateralized loan obligations).
- Their investment approach focuses on high-quality CLO managers and active management to optimize returns.
- 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.
- 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.
What This Means for Advisors
For financial advisors evaluating options for client portfolios, this conversation with Danielle Gilbert highlights important considerations around fixed income. Understanding the strategy behind each fund—not just the ticker—helps advisors make more informed allocation decisions and better communicate the rationale to clients.
The themes of fixed income and income investing discussed in this episode are particularly relevant in the current market environment, where advisors are increasingly looking for differentiated solutions that go beyond traditional benchmarks.
Listen to the Full Episode
This article is based on an episode of Behind the Ticker, hosted by Brad Roth, Founder and CIO of THOR Financial Technologies. For the full conversation with Danielle Gilbert, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.