INVESCO EUR AAA CLO UCITS ETF GBP HDG AC

Issuer: Invesco

Asset Class: Fixed Income

TER: 25bps

Trading Currency: GBX

Pays Income: False

Listing Date: 14 Aug 2025

Ticker: CLOX

ISIN: IE000JBJ1NZ4

This actively managed fund offers targeted exposure to the highest-rated tranches of European Collateralised Loan Obligations (CLOs). The strategy focuses exclusively on AAA-rated, euro-denominated CLOs, aiming to provide a total return through a combination of income and capital appreciation. CLOs are structured securities backed by a diversified pool of senior secured corporate loans, and by investing only in the most senior, AAA-rated tranches, the fund seeks to offer a significant degree of credit protection. The underlying loans are predominantly floating-rate, which means their coupon payments adjust to changes in prevailing interest rates. This characteristic can make the fund an attractive option for portfolios seeking to mitigate interest rate risk, particularly in a rising rate environment.

The investment is designed for those looking to diversify their fixed-income allocation with an asset class that has historically offered attractive yields relative to other highly-rated debt instruments like government or corporate bonds. The active management approach allows for professional security selection and risk management within the complex and specialised CLO market. By focusing on the top of the capital structure, the fund aims to provide a defensive profile, capturing the yield potential of the underlying loan market while minimising default risk. The specific share class is also hedged, seeking to reduce the impact of currency fluctuations between the fund's underlying assets and the investor's home currency.

While the AAA rating denotes the highest level of credit quality, investors should remain aware of the inherent risks. CLOs are complex instruments that carry liquidity and credit risks tied to the performance of the underlying below-investment-grade corporate loans. An economic downturn could lead to increased defaults within the loan portfolios, potentially impacting the valuation of the CLO tranches. Therefore, this product may be suitable for more sophisticated investors who understand these risks and are seeking a high-quality, floating-rate income solution to enhance their portfolio's yield and diversification.