UBS EUR AAA CLO UCITS ETF HGBP DIS

Issuer: UBS

Asset Class: Fixed Income

TER: 28bps

Trading Currency: GBX

Pays Income: False

Listing Date: 15 Jul 2025

Ticker: CLOH

ISIN: LU3028243718

This investment vehicle provides targeted exposure to the highest-rated segment of the European Collateralized Loan Obligation (CLO) market. CLOs are structured finance securities backed by a diversified pool of senior secured corporate loans, which are typically below investment grade. The fund, however, focuses exclusively on the AAA-rated tranches of these structures. This senior-most tranche has the highest claim on the cash flows generated by the underlying loan portfolio and benefits from significant credit enhancement from the subordinated tranches below it, making it the most resilient to potential defaults. A key characteristic of the underlying loans, and therefore the CLO tranches, is their floating-rate nature. This means their coupon payments adjust periodically based on prevailing short-term interest rates, which can make the investment an attractive option for income generation in a rising or fluctuating rate environment, as it carries very low interest rate duration risk.

By offering access to an asset class traditionally dominated by institutional investors, this fund serves as a powerful diversification tool within a fixed-income allocation. It provides a distinct risk-return profile compared to traditional government and corporate bonds. The combination of high credit quality (AAA rating) and floating-rate coupons aims to deliver a compelling yield with a defensive posture. Investors might consider this product to enhance portfolio income, reduce overall portfolio sensitivity to interest rate changes, and gain exposure to the secured corporate loan market through a liquid, regulated structure. The strategy is designed for those seeking to diversify their income sources while maintaining a strong focus on capital preservation at the highest level of the CLO capital structure. This specific share class also incorporates a currency hedge to minimize the impact of exchange rate volatility between its base and trading currencies.