Eldridge, an asset management and insurance holding company with approximately USD74 billion in assets under management, has announced the expansion of its ETF offering with the launch of its first actively managed fixed income ETF in Europe: the Eldridge AAA CLO UCITS ETF (ticker: TAAA).
The firm writes that TAAA draws on its structured credit capabilities and is designed to provide investors and allocators with a compelling investment option when building portfolios. Launching this strategy can address an increasing market demand for access to the asset class in an accessible ETF wrapper, in accordance with UCITS regulations, the firm writes, giving international investors access to USD-denominated AAA CLO liabilities without US withholding taxes.
Targeted at sophisticated investors who are not US taxpayers, TAAA seeks to generate current return income and capital preservation by investing in high quality US dollar-denominated AAA-rated CLO bonds.
The firm writes that this corner of the corporate credit market has a long-standing, robust historical track record, with the lowest level of expectation for default risk. With TAAA, investors can now gain access to a diverse pool of AAA-rated CLO bonds, which can offer higher yields than other similarly rated investments. Additionally, AAA-rated CLO bonds are typically less correlated to traditional stocks and bonds than other credit assets.
“Building on Eldridge’s heritage as investment specialists in the CLO space, we are excited to introduce this new solution to investors globally,” says 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.”
Key features of the Eldridge AAA CLO UCITS ETF include:
Potential for consistent income: TAAA expects to pay a monthly dividend to investors, offering consistent income derived from floating-rate payments based on three-month SOFR and credit spreads.
Capital Preservation: TAAA seeks to provide investors access to high-quality US dollar-denominated AAA-rated CLO bonds with robust historical performance and a zero-default track record.
Broad Exposure: TAAA can provide investors with exposure to a diverse portfolio of industries, companies, and institutional loan managers offering higher potential returns than traditional fixed-income investments.
Active Management by CLO Experts: TAAA is actively managed by Eldridge’s team of CLO investment specialists, managing one of the largest CLO investment portfolios.
“We are committed to delivering competitive risk-adjusted returns through our rigorous due diligence and portfolio construction process,” says Andrew Ward, Co-Portfolio Manager of TAAA. “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.”
TAAA is the latest addition to Eldridge’s actively managed fixed income ETF suite, which also include the Eldridge AAA CLO ETF (CLOX) and Eldridge BBB-B CLO ETF (CLOZ).
The ETF listed on Deutsche Börse Xetra on March 5 with a total expense ratio of 0.35 per cent.
