Invesco USD AAA CLO UCITS ETF GBP Hedged Acc

Issuer: Invesco

Asset Class: Fixed Income

TER: 25bps

Trading Currency: GBX

Pays Income: False

Listing Date: 22 May 2025

Ticker: ICLA

ISIN: IE0006MHC136

This actively managed fund seeks to deliver income by investing primarily in the highest-rated tranches of Collateralised Loan Obligations (CLOs). CLOs are securitised portfolios of senior secured corporate loans, and by focusing exclusively on AAA-rated securities, the strategy aims to provide exposure to this asset class while significantly mitigating credit risk. The active approach allows portfolio managers to select CLOs based on their assessment of underlying collateral quality, structural protections, and relative value, aiming to optimise risk-adjusted returns.

A key characteristic of the underlying assets is their floating-rate nature, which means the income they generate adjusts in line with prevailing short-term interest rates. This feature can be particularly advantageous in periods of rising rates, as it helps to insulate the investment’s value from the negative price impact that typically affects traditional fixed-rate bonds. Furthermore, this specific share class incorporates a currency hedge, which is designed to minimise the volatility arising from exchange rate fluctuations between the fund's underlying US dollar-denominated assets and the investor's home currency in pound sterling.

Within a diversified portfolio, this investment can serve as a source of potentially attractive income with a strong emphasis on capital preservation. It offers a higher yield potential compared to many other high-grade debt instruments, such as government bonds or investment-grade corporate debt. The combination of active management, a focus on top-tier credit quality, and floating-rate coupons makes it a compelling option for investors looking to enhance income and diversify their fixed income allocation without taking on substantial credit or duration risk.