Key Takeaways
- • RBC Global Asset Management, through its RBC BlueBay unit, is planning to launch its first interval fund focused on CLO equity, the riskiest tranches of collateralized loan obligations, according to portfolio manager Mark Shohet, as reported by Bloomberg.
- • The vehicle will be an interval fund, a structure with scheduled exits, offering a public-market alternative for investors who are pulling cash from private credit vehicles.
- • The fund will mostly buy US CLO equity, with flexibility to add junior CLO debt, European CLOs and other structured credit over time.
- • The launch illustrates a broader shift in which managers are packaging illiquid credit exposures into semi-liquid public-market wrappers as redemption pressure builds in private credit.
Summary
Royal Bank of Canada's asset management arm is preparing to launch a public-market fund targeting collateralized loan obligation (CLO) equity, a move that Bloomberg reports comes as retail investors withdraw cash from private credit. According to portfolio manager Mark Shohet, RBC Global Asset Management plans to introduce its first interval fund, a vehicle that offers scheduled exit windows rather than daily liquidity.
The fund will focus on the riskiest slices of corporate loan pools. CLO equity sits at the bottom of the capital structure, absorbing first losses and receiving residual cash flows after senior and mezzanine tranches are paid, which makes it a higher-risk, higher-return allocation. Initially the portfolio will be concentrated in US CLO equity. Mandate flexibility allows future allocations to junior CLO debt, European CLOs and other structured credit instruments.
The product is positioned as a public-market alternative to private credit for investors seeking exposure to leveraged loan economics without the lockups and redemption constraints that have recently tested private credit funds. Bloomberg's report frames the launch within a wider trend of managers repackaging credit exposures into more accessible structures. The article does not disclose fund size, target raise, fee terms or launch timing.
The fund will focus on the riskiest slices of corporate loan pools. CLO equity sits at the bottom of the capital structure, absorbing first losses and receiving residual cash flows after senior and mezzanine tranches are paid, which makes it a higher-risk, higher-return allocation. Initially the portfolio will be concentrated in US CLO equity. Mandate flexibility allows future allocations to junior CLO debt, European CLOs and other structured credit instruments.
The product is positioned as a public-market alternative to private credit for investors seeking exposure to leveraged loan economics without the lockups and redemption constraints that have recently tested private credit funds. Bloomberg's report frames the launch within a wider trend of managers repackaging credit exposures into more accessible structures. The article does not disclose fund size, target raise, fee terms or launch timing.
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