Format has been a hit in the US, while European regulators have approved no new CLO mutual funds since 2020
Europe’s first exchange traded fund investing in collateralised loan obligations is due to list tomorrow, five years after regulators appeared to tighten restrictions on new Ucits funds wholly invested in the asset class. The listing of the Fair Oaks AAA CLO ETF comes in the wake of surging demand for similar ETFs in the US, where net inflows into CLO ETFs hit a record $8.
“We have seen growing interest from investors in the US, and we believe this will be the case in Europe as well.” Roger Coyle, also a co-founder and partner at Fair Oaks, accepted there was a “perception of complexity” around CLOs and that “regulators are cautious about approving CLO investment in vehicles that are typically more retail oriented”, even though in Fair Oaks’ case it is not targeting the “mass retail” market.
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