Credit -proof bonds, so -called Clos (Collateralized Loan Obligations), have long been considered the domain of institutional investors. In the meantime, ETFs have also given private investors access to this yield class.
The clo market has been 1.3 bio in the past five years. Dollar more than doubled, driven by the demand for higher returns and to avoid or reduce the risk that rising interest rates press the bond value.
Clos are structured financial products that are secured by a diversified pool of sophisticated corporate loans. These loans are divided into different tranches, whereby AAA-rated tranches bear the slightest risk and make up about 60 percent of the market. The decisive advantage: Clos are mostly variable interest and thus automatically adapt to changed interest rate levels, while traditional bonds lose value when interest rates rising.
For investors, Clos offer attractive returns from typically 4 to 6 percent in AAA rating and a low correlation for traditional bond markets. The broad diversification of over 200 or more borrowers from various industries significantly reduces the risk of default. Nevertheless, investors should be aware of complexity: Clos are structured products with credit risk, and liquidity can be restricted in stressful situations. An investment horizon of at least three to five years and a moderate to balanced risk will be recommended.
The Investco USD AAA Clo Ucits ETF Dist (ISIN IE000PKN5N58 / WKN A40VVP), as one of the first Clo ETFs, offers access to this segment. With a fund volume of 70 million euros and a total cost rate of 0.25 percent annually, the actively managed fund invests at least 80 percent of its assets in US dollar-denominated clo bonds with AAA rating and up to 20 percent in AA-rated titles. Management pursues a physical replication strategy and keeps the underlying securities directly. The ETF was launched in February 2025 and releases the interest income to investors, which makes it attractive for income -oriented investors.
The Fair Oaks aaa Clo Fund Ucits ETF EUR DIST (ISIN LU2785470191 / WKN A40E6R) with a total cost rate of 0.35 percent is the only ETF in the trio that is classified as sustainable. The fund was launched in September 2024 and currently has a volume of 20 million euros. It offers access to European and US Clos with AAA rating and reduces the currency risk for European investors through its euro denomination. The current distribution return of 2.84 percent with a one-year performance of 4.28 percent is particularly remarkable. The quarterly distributions have been 28.82 euros per share in the past twelve months.
The UBS EUR AAA Clo Ucits ETF EUR ACC (ISIN LU3028243122 / WKN A415BV) is the latest newcomer to the Clo segment and was only launched in July 2025. With a fund volume of 44 million euros and a ter of 0.25 percent, the end of the end focuses exclusively on euro bonds with AAA rating. This eliminates the currency risk completely for European investors. The actively managed ETF pursues a physical full replication and automatically reinvests all interest income. Since the edition, the fund has been a performance of 0.50 percent and benefits from the growing demand for Euro-Clos. The strategy is based on proprietary selection criteria of UBS and offers broad diversification via various issuers and terms.
In summary: The choice between the three ETFs depends on individual preferences. The Investco ETF is suitable for investors who prefer distributions in dollars, the Fair Oaks ETF combines sustainability with attractive distributions with mixed currency exposure and the UBS ETF is particularly interesting for European investors who do without currency risks and prefer thesaurs.