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.
Related insights
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.