Invesco has launched two actively managed trade traded funds (ETFs) which provide publicity to the investment-grade personal credit score collateralised mortgage obligation (CLO) market.
The Invesco USD AAA CLO UCITS ETF and the Invesco EUR AAA CLO UCITS ETF are geared toward skilled traders. At the very least 80 per cent of the CLO debt securities wherein the ETFs will likely be invested will likely be AAA-rated, and the rest will largely encompass the second highest-rated AA tranches.
The Invesco USD AAA CLO UCITS ETF is the primary European-domiciled UCITS ETF to offer diversified publicity to USD AAA CLO notes.
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Gary Buxton, head of ETFs and listed methods for EMEA and APAC at Invesco, famous that final yr’s document flows bear testomony to the recognition of the ETF construction. He stated that the ETF property managed by Invesco in Europe grew by 40 per cent in 2024, and he believes demand will broaden as extra ETFs are created to offer traders with environment friendly publicity to new asset courses equivalent to personal credit score CLOs.
“Though the CLO market has grown quickly, with excellent issuance practically doubling prior to now 5 years, they’ve solely not too long ago turn into accessible to traders by way of an ETF, first within the US and now in Europe,” stated Buxton.
“This publicity opens up CLO funding to a variety of refined traders.”
“Shoppers select to associate with Invesco for the depth and breadth of our providing, from asset class and funding type to the selection of funding car,” added Stephanie Butcher, co-head of funding at Invesco.
“We goal to ship the most effective outcomes for our purchasers by empowering extremely skilled groups to concentrate on their key areas of experience, and we are able to leverage this benefit by combining specialisms that additional advantages purchasers.
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“We’ve been combining our experience in personal credit score and ETF building efficiently for 15 years within the US, and we anticipate the launch of such a actively managed ETF to drive progress in Europe.”
Michael Craig, head of European senior loans at Invesco Non-public Credit score, added that Invesco has greater than 25 years of expertise as each an investor and issuer of CLOs, and understands that the standard of the CLO supervisor is essential to efficiency by market cycles.
“Our energetic safety choice, threat administration course of, and market presence add vital worth,” he stated.
“Whereas we goal to ship index-like efficiency, we’re not constrained and actively choose every safety we spend money on based mostly on its advantage.
“We concentrate on CLOs from high-quality managers that we belief, as these are likely to exhibit much less volatility and higher liquidity in confused market situations. We often carry out stress-testing on our portfolios to simulate these eventualities.”
Learn extra: CLO ETF market grows to $19bn