London-based corporate credit specialist Fair Oaks Capital plans to launch the first European-domiciled collateralized loan obligation exchange-traded fund in September, with an initial focus on institutional investors in continental Europe and the U.K., a spokesperson confirmed.
The euro-denominated CLO exchange-traded fund is set to list on Deutsche Boerse Xetra on Sept. 10, having received approval from the Luxembourg regulator.
The actively managed ETF invests in AAA-rated CLOs and is an ETF share class of an existing Undertakings for Collective Investment in Transferable Securities fund. That UCITS fund — which operates under a European regulatory framework for managing and selling mutual funds — was launched in 2019 and had €161 million ($174 million) in assets as of July 31.
The ETF is a long-only portfolio with no leverage and is also classified as Article 8 under Europe’s ESG rules. The ETF is set to list on the London Stock Exchange shortly after listing on the Deutsche Boerse Xetra, a news release said.
The fund is managed by a team of six and supported by the broader Fair Oaks credit team.
"Fair Oaks AAA CLO ETF offers investors liquid exposure to a diverse pool of AAA-rated floating-rate assets, which have a superb track record of no defaults since the first AAA-rated CLO was issued over 25 years ago,” Miguel Ramos Fuentenebro, co-founder and partner at the firm, said in the release. “Our core belief is that the CLO market generates consistent, repeatable and superior risk-adjusted returns over multiple market cycles versus other credit strategies.”
Fair Oaks Capital runs over $3 billion in assets across CLOs and corporate credit-based strategies.
CLO ETFs are already available to U.S. investors, the release added.
