Invesco has launched two actively managed exchange traded funds (ETFs) which offer exposure to the investment-grade private credit collateralised loan obligation (CLO) market.

The Invesco USD AAA CLO UCITS ETF and the Invesco EUR AAA CLO UCITS ETF are aimed at professional investors. At least 80 per cent of the CLO debt securities in which the ETFs will be invested will be AAA-rated, and the remainder will largely consist of the second highest-rated AA tranches.

The Invesco USD AAA CLO UCITS ETF is the first European-domiciled UCITS ETF to provide diversified exposure to USD AAA CLO notes.

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Gary Buxton, head of ETFs and indexed strategies for EMEA and APAC at Invesco, noted that last year’s record flows bear testament to the popularity of the ETF structure. He said that the ETF assets managed by Invesco in Europe grew by 40 per cent in 2024, and he believes demand will broaden as more ETFs are created to provide investors with efficient exposure to new asset classes such as private credit CLOs.

“Although the CLO market has grown rapidly, with outstanding issuance nearly doubling in the past five years, they have only recently become available to investors via an ETF, first in the US and now in Europe,” said Buxton.

“This exposure opens up CLO investment to a wide range of sophisticated investors.”

“Clients choose to partner with Invesco for the depth and breadth of our offering, from asset class and investment style to the choice of investment vehicle,” added Stephanie Butcher, co-head of investment at Invesco.

“We aim to deliver the best results for our clients by empowering highly experienced teams to focus on their key areas of expertise, and we can leverage this advantage by combining specialisms that further benefits clients.

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“We have been combining our expertise in private credit and ETF construction successfully for 15 years in the US, and we expect the launch of this type of actively managed ETF to drive growth in Europe.”

Michael Craig, head of European senior loans at Invesco Private Credit, added that Invesco has more than 25 years of experience as both an investor and issuer of CLOs, and understands that the quality of the CLO manager is key to performance through market cycles.

“Our active security selection, risk management process, and market presence add significant value,” he said.

“While we aim to deliver index-like performance, we’re not constrained and actively select each security we invest in based on its merit.

“We focus on CLOs from high-quality managers that we trust, as these tend to exhibit less volatility and better liquidity in stressed market conditions. We regularly perform stress-testing on our portfolios to simulate these scenarios.”

Read more: CLO ETF market grows to $19bn