Investors Buying CLOs Are Increasingly Using ETFs, Bank of America Says
- CLO-focused ETFs have grown into a $16 billion market
- Vehicles are opening the CLO market up to retail investors
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Investors who buy bundles of loans packaged into bonds are increasingly using exchange-traded funds to do so, according to a report from Bank of America.
ETFs have injected $9.5 billion into leveraged loan CLOs since the beginning of the year, even as holdings of AAA rated CLO bonds by other types of investors have dropped by $20 billion, Bank of America strategists wrote. Almost all of the ETFs’ cash has gone into AAA bonds, the most senior holdings.