Active ETF Innovation

UBS Asset Management highlights the role of active ETFs in providing transparent, liquid access to senior CLO tranches, an asset class valued for yield premiums and historical resilience.

Key Takeaways

• 1.Senior CLO tranches (AAA and AA) represent 70-75% of the $1 trillion global CLO market and offer yield premiums over corporate bonds with floating-rate benefits.
• 2.Active ETF structures provide the transparency, daily liquidity, and operational simplicity required to manage complex structured credit exposures like CLOs effectively.
• 3.Senior CLO tranches have historically demonstrated extreme resilience; there have been zero AAA defaults and only one AA default in the US over the last 30 years.

Table of Contents

• Authors
• Rethinking access to structured credit
• 1. What makes senior CLO tranches a compelling entry point for active ETF innovation?
• 2. How does the Credit Investments Group translate its 26+ years of credit experience into an ETF structure?
• 3. Can you tell us more about how you go about managing a strategy like this? How often are decisions revisited?
• 4. How does this ETF manage risk in a segment that's traditionally perceived as complex?
• 5. What's the expected duration and yield profile of the fund and how does it evolve through active positioning?
• 6. Where do senior CLO tranches fit within a broader fixed income allocation, and how can they be accessed through an ETF structure?
• 7. How is liquidity managed in an asset class that is still relatively new to the ETF landscape?
• 8. How is your role shape the way you think about building and managing an ETF strategy like this?
• 9. How do you ensure consistent access to top-tier CLO managers when scaling this ETF strategy?
• 10. How does this approach compare with other recent CLO ETF launches in the market? What sets the UBS strategy apart?
• Adoption Snapshot

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