VanEck launches CLO ETF
VanEck has announced the launch of the VanEck CLO ETF (CLOI), designed to provide exposure to the USD1 trillion collateralised loan obligation (CLO) market through an actively managed fund sub-advised by PineBridge Investments, a private, global asset manager focused on active, high-conviction investing.
“The growth of the CLO market has been driven by the benefits they provide, including enhanced yields versus equivalently rated bonds and loans and their considerable structural protections. In today’s rising rate environment, the floating rate coupons of CLOs make them particularly attractive,” says William Sokol, Senior ETF Product Manager at VanEck. “We’re excited to launch CLOI with PineBridge at a time when investors looking for enhanced income and risk protection have few options.”
“Our institutional clients have understood the strong value proposition of our CLO strategies for more than 20 years, and we are looking forward to extending access to this market to a broader investor base,” says Laila Kollmorgen, Portfolio Manager, CLO Tranche, at PineBridge Investments. “I’m looking forward to partnering with VanEck on this strategy, which aims to allow investors to combine the value of CLOs with the transparency, liquidity and costs benefits of an ETF.”
CLOI exposure focuses primarily on investment grade CLOs. The firm writes that the ETF combines VanEck’s leadership in income-focused investment solutions with the established active management of PineBridge, a USD146 billion private global asset manager focused on active, high conviction investing across various asset classes. PineBridge is both a CLO manager and an active investor in CLO tranches, and leverages a rigorous, time-tested investment process with disciplined portfolio construction, robust risk management, and a foundation in credit-intensive research. PineBridge has extensive sub-advisory experience with USD13.6 billion in sub-advised assets as of March 31, 2022.
“We believe this new strategy will be an attractive and timely complement to our income solutions line-up, which includes differentiated, enhanced and less correlated sources of yield relative to traditional fixed income asset classes. We believe CLOI will allow investors of all types to potentially benefit from the relatively high income, risk protections and floating rate exposure that CLOs provide,” says Ed Lopez, Head of Product Management at VanEck.
CLOI joins VanEck’s lineup of alternative income ETFs that also includes the VanEck Investment Grade Floating Rate ETF (FLTR), an ETF that invests in U.S. denominated floating rate notes issued by corporate issuers and rated investment grade, VanEck Fallen Angel High Yield Bond ETF (ANGL), which offers exposure to high yield bonds originally issued as investment grade, and VanEck BDC Income ETF (BIZD), which invests in publicly traded business development companies.