Eldridge, a New York-headquartered asset management and insurance holding company, has launched the Eldridge AAA CLO Ucits ETF (Taaa), giving global investors access to high-quality US dollar-denominated AAA-rated CLO bonds.
Listed on German stock exchange Deutsche Börse Xetra on March 5 with a total expense ratio of 0.35%, Taaa is aimed at “sophisticated investors who are not US taxpayers” seeking income and capital preservation through the structured credit market. The ETF is regulated by Luxembourg’s financial regulator, the Commission de Surveillance du Secteur Financier (CSSF).
Taaa targets exposure to US dollar-denominated AAA-rated CLO bonds, an asset class with a historical performance and a zero-default track record. The ETF seeks to generate current return income and capital preservation, offering investors access to a diverse pool of high-quality CLO bonds that typically provide higher yields than other AAA-rated securities.
“Building on Eldridge’s heritage as investment specialists in the CLO space, we are excited to introduce this new solution to investors globally,” said Tarek Barbar, co-portfolio manager of Taaa. “The Eldridge AAA CLO Ucits ETF has potential to enhance clients’ portfolios by offering consistent stable levels of floating rate income.”
The fund is structured to pay monthly dividends derived from floating-rate payments based on three-month SOFR and credit spreads, offering potential for consistent income. In addition to broad exposure across industries, companies, and institutional loan managers, Taaa’s active management approach leverages Eldridge’s expertise in managing one of the largest CLO portfolios.
“We are committed to delivering competitive risk-adjusted returns through our rigorous due diligence and portfolio construction process,” said Andrew Ward, co-portfolio manager of the fund. “The Eldridge AAA CLO Ucits ETF reflects that very commitment and will seek to provide global investors access to the highest quality AAA-rated CLO bonds.”
With low correlation to traditional stocks and bonds, AAA-rated CLO bonds offer a compelling alternative for diversifying fixed income allocations, according to the provider. The ETF aims to address rising market demand for such assets in an accessible, Ucits-compliant ETF wrapper that avoids US withholding tax exposure.
