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Clearance Secure Plus Offers 7% Yield Amid Low-Rate Environment

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  Published in Stocks and Investing on Tuesday, November 25th 2025 at 7:58 GMT by Seeking Alpha

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Quality Dividends on Clearance Secure Plus: 7% Yields Today – A Comprehensive Overview

The Clearance Secure Plus (CSP), a relatively obscure yet compelling fixed‑income ETF, has recently drawn the attention of income‑focused investors. According to a Seeking Alpha feature dated 18 November 2025, the fund is offering a near‑7% yield—an attractive figure in a low‑interest‑rate environment that has left many traditional income vehicles underperforming. In this article we distill the core points raised by the original article, weave in the broader context gleaned from the linked resources, and offer a clear picture of why CSP is positioned as a “quality dividend” vehicle today.

1. Fund Basics: What is Clearance Secure Plus?

Clearance Secure Plus is managed by the firm Clearance Asset Management (NASDAQ: CLSR) and trades under the ticker CSP on the NYSE. Unlike many broad‑based bond funds, CSP has a tightly focused mandate:

• Asset Size: Approximately $1.2 billion of net assets under management (as of the last quarterly close).
• Expense Ratio: 0.59 % – notably higher than many index‑style bond ETFs but justified by the fund’s active credit‑selection and risk‑management approach.
• Distribution Frequency: Quarterly (on the 15th of March, June, September, and December).
• Yield to Maturity (YTM): 6.98 % (based on the most recent NAV calculation).
• Historical Performance: Over the past 12 months, CSP’s cumulative return was +4.3 %, largely driven by yield rather than capital appreciation.

CSP’s mandate is to generate stable income from high‑quality fixed‑income securities while preserving capital. The portfolio is capped at 30 % corporate bonds (primarily U.S. investment‑grade), 40 % U.S. Treasury and Treasury‑issued securities, and 30 % mortgage‑backed securities (MBS). The remaining allocation is sometimes directed to municipal bonds and other short‑duration instruments.

2. Why 7 % Now? The Market Landscape

The Seeking Alpha article frames CSP’s yield in the context of a persistently low‑yield environment:

• Fed Rate Outlook: The Federal Reserve’s policy rate is currently at 5.5 % (as of October 2025). While this represents a significant uptick from the 0.25 % rate at the start of 2020, the bond market has not fully reflected the increase.
• Yield Curve Flattening: Short‑term yields have surged more than long‑term yields, creating a flat or slightly inverted yield curve. This makes mid‑duration funds like CSP more attractive for yield seekers.
• Inflation Concerns: With headline CPI hovering around 4.2 %, real yields on many short‑duration and Treasury bonds have become negative or near zero. CSP’s 7 % yield, therefore, offers a real return cushion.
• Credit Spread Dynamics: Corporate and MBS spreads have widened modestly, providing CSP’s portfolio managers with opportunities to add higher‑yielding, yet still high‑quality, credits to the portfolio.

The article notes that CSP’s 7 % yield has already been above the average yield of 5.5 % for comparable “high‑yield, high‑quality” ETFs such as the PIMCO Income Fund (PIM) and the iShares Core U.S. Aggregate Bond ETF (AGG). In a period where many bond ETFs have struggled to deliver attractive yields, CSP stands out.

3. Portfolio Construction: Credit Quality & Risk Management

The Clearance Secure Plus portfolio is engineered to keep risk in check while maintaining income:

The fund’s credit risk profile is reinforced by a tight spread compression policy—the managers actively seek credits with “yield‑to‑risk” profiles that outperform the broader market while remaining within a high‑quality band. Moreover, the average maturity is just 3.7 years, striking a balance between yield and interest‑rate sensitivity. In times of tightening rates, this short‑duration tilt helps cushion the portfolio from price declines.

The article highlights a couple of key risk mitigants:

• Active Rebalancing: CSP’s management team frequently rebalances the portfolio to capture newly available high‑yield credits while trimming outliers that could expose the portfolio to credit deterioration.
• Credit Hedging: Though not disclosed in full detail, the fund employs credit default swaps (CDS) to hedge against potential downgrades in its corporate holdings.
• Liquidity Buffer: Approximately 10 % of the portfolio is held in highly liquid short‑term instruments to meet redemption demands without forcing the sale of lower‑quality assets.

4. Tax Considerations & Investor Suitability

Income from CSP can come from interest (non‑tax‑exempt) and, in the case of MBS, mortgage interest and tax‑exempt state‑municipal interest if applicable. The Seeking Alpha piece stresses:

• Tax Efficiency: The fund does not hold a high concentration of municipal securities—only a small fraction—so investors in high‑tax brackets may prefer a dedicated muni bond ETF. However, for investors seeking a blend of high yield with moderate tax exposure, CSP can be a useful addition.
• Qualified Dividends: The majority of the distribution is treated as ordinary interest, taxed at the investor’s ordinary income rate. Some portion, particularly from the MBS holdings, may be partially tax‑exempt if it includes state‑municipal components.
• Tax‑Deferred Accounts: CSP is well‑suited for IRAs and 401(k)s, where ordinary income is deferred. Its higher expense ratio is offset by the superior yield that might be required to meet retirement income goals.

5. Performance Review & Comparative Analysis

In the past 12 months, CSP’s total return of +4.3 % outpaced its benchmark— the Bloomberg Barclays U.S. Aggregate Bond Index (AGG), which returned +1.8 % over the same period. The performance differential is largely credited to CSP’s higher yield and active credit selection. In a year of modest rate hikes, CSP’s shorter duration mitigated volatility relative to longer‑dated benchmarks.

Comparing CSP to its peers:

• PIMCO Income Fund (PIM) – Yield: 6.4 %; Expense Ratio: 0.49 %; 12‑month return: +3.1 %
• iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) – Yield: 4.2 %; Expense Ratio: 0.14 %; 12‑month return: +0.7 %
• Vanguard Total Bond Market ETF (BND) – Yield: 3.9 %; Expense Ratio: 0.035 %; 12‑month return: +0.4 %

From this perspective, CSP offers the highest yield for a moderately higher expense ratio, but it also carries a somewhat elevated risk profile due to its inclusion of mortgage‑backed securities and short‑duration corporate debt.

6. Key Takeaways for Income Investors

1. High Yield in a Low‑Rate World – CSP’s 6.98 % yield stands out among U.S. bond ETFs and offers a real return above inflation in many jurisdictions.
2. Quality‑First Approach – With a focus on AAA‑rated Treasuries and AA‑rated corporates, the fund maintains a conservative credit risk profile.
3. Short‑Duration Tilt – The 3.7‑year average maturity protects the portfolio from significant price declines when rates rise.
4. Higher Expense Ratio – The 0.59 % expense ratio is higher than most index funds, but can be justified by the higher yield and active management benefits.
5. Tax Considerations – Ordinary interest tax treatment may limit attractiveness for high‑tax‑bracket investors; a tax‑efficient structure (e.g., muni‑heavy) could be more suitable in such cases.

7. Bottom Line: Is CSP Worth Adding to Your Portfolio?

For income‑centric investors who are comfortable with a moderate expense ratio and seek a higher yield from a high‑quality fixed‑income basket, CSP presents an attractive option. Its yield advantage is particularly salient in an environment where traditional Treasury and high‑grade corporate funds deliver low returns. That said, investors should weigh the fund’s tax implications and the potential for modest credit risk associated with mortgage‑backed securities.

If your portfolio is already heavily weighted in low‑yield Treasury or corporate bond ETFs, or if you rely on tax‑efficient income (e.g., high‑tax‑rate investors or those heavily invested in municipal bonds), you might consider blending CSP with a more tax‑friendly counterpart rather than replacing your existing holdings outright.

Ultimately, Clearance Secure Plus offers a quality dividend in the form of a high, steady yield coupled with a conservative credit and duration profile—an appealing recipe for investors who are ready to pay a premium for a higher, more reliable income stream in today’s challenging rate environment.

Disclaimer: The above summary is based on the content of the Seeking Alpha article and publicly available data as of the date of writing. Individual circumstances may vary; always consult with a qualified financial professional before making investment decisions.