Aegon Asset Management has launched three funds investing in European collateralised loan obligations (CLOs), giving investors access to the asset class across the credit spectrum from AAA to sub-investment grade.

The manager said the three funds will focus on the growing European CLO market, which is now estimated at around €300bn (£257.9bn) and typically offers stronger credit quality than its US counterpart.

The three funds are the Aegon European High Grade CLO, Aegon European CLO and Aegon European CLO Opportunities, all of which offer daily liquidity and are Luxembourg-domiciled UCITS.

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“We find the risk-return profile of European CLOs very attractive and believe the floating-rate nature of CLOs is particularly appealing in a time of possible interest rate volatility,” said Frank Meijer, head of alternative fixed income and asset-backed securities (ABS) at Aegon AM. “As the scale of the market continues to grow, it’s been possible for us to set up scalable and diversified CLO funds across the rating spectrum.”

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The Aegon European High Grade CLO fund will invest in AAA and AA CLO tranches, with its exposure to the latter capped at 25 per cent, the firm said.

Meanwhile, the Aegon European CLO vehicle will invest in investment-grade tranches with an average credit quality of A/BBB. The Aegon European CLO Opportunities fund will invest in non-investment-grade CLO tranches and will be available to institutional investors only, the manager added.

Aegon manages €23bn in ABS and CLOs globally, including more than €4.5bn in European CLOs.

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