Invesco Launches ETFs Targeting Top-Rated Corporate Loan Securities

Invesco has launched two actively managed UCITS ETFs, designed to provide exposure to the highest-rated tranches of the collateralized loan obligation (CLO) market. The Invesco USD AAA CLO UCITS ETF and Invesco EUR AAA CLO UCITS ETF leverage the firm's expertise in both private credit and ETF construction, two of its fastest-growing investment segments.

The USD-denominated fund marks a significant milestone as the first European-domiciled UCITS ETF to offer diversified exposure to USD AAA CLO notes, the largest and most liquid CLO market globally. Meanwhile, the EUR-denominated counterpart caters to investors seeking a similar risk-return profile within the European currency space.

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These ETFs aim to deliver consistent income and capital preservation by primarily investing in AAA-rated tranches of floating-rate debt securities issued by CLOs. At least 80% of the holdings will be in AAA-rated CLO debt, with the remainder consisting of AA-rated investment-grade securities.

Michael Craig, Head of European Senior Loans at Invesco Private Credit, highlighted the advantages of actively managed exposure to CLOs: "How you gain exposure to this USD1.3 trillion asset class is crucial, and having an experienced manager making the investment decisions can make all the difference." With over 25 years of experience in the CLO space, Invesco aims to deliver superior risk-adjusted returns through active security selection, rigorous risk management, and stress-testing processes.

Craig further explained the appeal of AAA-rated CLO tranches: "The AAA tranche of CLOs offers an uplift in spread versus other similarly rated instruments, despite having never defaulted. Their floating rate nature means they exhibit low correlation with many other fixed-income asset classes, making them attractive to professional investors looking to diversify."

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