On Wednesday, Nuveen expanded its arsenal of ETFs with the launch of the Nuveen AA-BBB CLO ETF
The fund looks to provide high potential for current income for its investors. It is actively managed and has a net expense ratio of 0.25%.
“To complement traditional income portfolios, and with increased awareness of the robust yields and lower historical defaults of CLOs, we’re seeing significant demand among our clients for this attractive alternative credit allocation,” added Jeff Carlin, head of Global Wealth Advisory Services at Nuveen
Targeting A-Rated CLOs
As the fund’s title implies, NCLO primarily invests its assets toward collateralized loan obligations (CLOs) rated between AA+ to BBB-. However, the Nuveen team notes that the fund will focus on A-rated CLOs. This stands in stark contrast to many other CLO ETFs on the market, which traditionally zero in on AAA-rated CLOs.
In terms of portfolio concentration, NCLO looks to remain diversified. At the time of purchase, the fund is not investing more than 5% of its assets into an individual CLO. Additionally, it doesn’t invest more than 15% of its portfolio to CLOs overseen by a single CLO management team.
NCLO may invest some of its assets in alternate strategies. Up to 10% of the fund’s assets can be invested in CLOs rated between BB+ and B-. Additionally, 20% of the overall portfolio may be allocated to cash strategies or fixed income ETFs.
“CLOs have emerged as a popular fixed income ETF category in 2024,” noted Todd Rosenbluth, head of Research at VettaFi. “It is great to see Nuveen bring its expertise in this style to the ETF market.“
The launch of NCLO builds upon Nuveen’s selection of competitive ETF products. Currently, Nuveen has more than 20 ETFs listed in the United States. These funds account for over $10 billion in assets under management.
For more information, please visit VettaFi.com | ETF Trends.
