CLO ETFs in institutional portfolios: Understanding who is investing and why
Collateralised loan obligation exchange‑traded funds under the UCITS framework (UCITS CLO ETFs) have opened up access to a market that was once only made available through specialist mandates. Here, we explore who is allocating to CLO ETFs and their motivations.
6 minute read
Key takeaways:
- UCITS CLO ETFs transform what was once the domain of specialist mandates into a regulated and easy-to-implement solution that delivers the structural benefits of CLO investments while meeting today’s institutional demands for governance and cost discipline.
- Global interest in UCITS CLO ETFs is expanding as institutions seek efficient solutions that deliver yield and diversification without operational complexity, reinforcing their role as a globally relevant asset allocation tool.
- The shift toward UCITS CLO ETFs signals a broader evolution in credit implementation, as institutions prioritise efficiency and scalability—making these vehicles a standout solution for today’s governance driven environment, with clear advantages for those who position early.
UCITS CLO ETFs provide access to the structural benefits of CLOs – diversification, floating‑rate income, and robust credit enhancement – through a regulated, transparent, and liquid wrapper. In an environment where governance standards, liquidity considerations, and cost discipline matter more than ever, UCITS CLO ETFs deliver a solution that aligns with institutional oversight and implementation needs.
For investors managing income targets, liquidity needs, or portfolio resilience, the question is no longer “what are CLO ETFs?” but “who uses them and why?”. By mapping the motivations of different investor groups, we aim to provide a clear picture of how these strategies are being used in practice, helping institutional clients globally benchmark their own approach against peers and understand the portfolio roles that CLO ETFs can play.
IMPORTANT INFORMATION
Collateralised Loan Obligations are debt securities issued in different tranches, with varying degrees of risk, and backed by an underlying portfolio consisting primarily of below investment grade corporate loans. The return of principal is not guaranteed, and prices may decline if payments are not made timely or credit strength weakens. CLOs are subject to liquidity risk, interest rate risk, credit risk, call risk and the risk of default of the underlying assets.
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All opinions and estimates in this information are subject to change without notice and are the views of the author at the time of publication. Janus Henderson is not under any obligation to update this information to the extent that it is or becomes out of date or incorrect. The information herein shall not in any way constitute advice or an invitation to invest. It is solely for information purposes and subject to change without notice. This information does not purport to be a comprehensive statement or description of any markets or securities referred to within. Any references to individual securities do not constitute a securities recommendation. Past performance is not indicative of future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
Whilst Janus Henderson believe that the information is correct at the date of publication, no warranty or representation is given to this effect and no responsibility can be accepted by Janus Henderson to any end users for any action taken on the basis of this information.
6 minute read
Key takeaways:
- UCITS CLO ETFs transform what was once the domain of specialist mandates into a regulated and easy-to-implement solution that delivers the structural benefits of CLO investments while meeting today’s institutional demands for governance and cost discipline.
- Global interest in UCITS CLO ETFs is expanding as institutions seek efficient solutions that deliver yield and diversification without operational complexity, reinforcing their role as a globally relevant asset allocation tool.
- The shift toward UCITS CLO ETFs signals a broader evolution in credit implementation, as institutions prioritise efficiency and scalability—making these vehicles a standout solution for today’s governance driven environment, with clear advantages for those who position early.