Key Takeaways
- • Franklin Templeton, Barings, Fidelity Investments and Janus Henderson have recently announced exchange-traded funds that buy the higher-rated tranches of collateralized loan obligations (CLOs), according to Bloomberg.
- • The CLO ETF launches are positioned to give retail investors exposure to elevated interest rates while seeking to avoid defaults in private credit.
- • CLOs are backed by hundreds of risky corporate loans, and their senior tranches are structured so top-level investors absorb losses last if defaults rise.
Summary
Wall Street firms are packaging collateralized loan obligations into exchange-traded funds as a vehicle for retail investors seeking to benefit from higher interest rates while limiting exposure to defaults in private credit, according to Bloomberg's Credit Weekly column.
Franklin Templeton, Barings, Fidelity Investments and Janus Henderson have recently announced ETFs that invest in the higher-rated portions of CLOs. CLOs pool hundreds of leveraged corporate loans and are divided into tranches, with the senior, top-rated slices structured to be the last to take losses if borrower defaults increase. That structure is the basis of the pitch to investors concerned about credit stress in private lending markets.
The launches highlight a broader shift in how asset managers are packaging credit exposure for a wider audience. Bloomberg's source material for this story is limited to the article's opening framing, so this summary does not include fund sizes, fee structures or launch dates.
Franklin Templeton, Barings, Fidelity Investments and Janus Henderson have recently announced ETFs that invest in the higher-rated portions of CLOs. CLOs pool hundreds of leveraged corporate loans and are divided into tranches, with the senior, top-rated slices structured to be the last to take losses if borrower defaults increase. That structure is the basis of the pitch to investors concerned about credit stress in private lending markets.
The launches highlight a broader shift in how asset managers are packaging credit exposure for a wider audience. Bloomberg's source material for this story is limited to the article's opening framing, so this summary does not include fund sizes, fee structures or launch dates.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.