UBS EUR AAA CLO UCITS ETF (hedged to USD) A-dis
| Issuer: UBS |
| Asset Class: Fixed Income |
| TER: 28bps |
| Trading Currency: USD |
| Pays Income: False |
| Listing Date: 23 Sep 2025 |
| Ticker: CLOU |
| ISIN: LU3028243981 |
This fund is an actively managed investment vehicle designed to provide exposure to the European Collateralized Loan Obligation (CLO) market. Specifically, it targets the highest-rated tranche, AAA-rated CLOs, which represent the senior-most portion of the capital structure, aiming to minimize default risk. The portfolio consists primarily of EUR-denominated CLOs, offering distinct exposure to the European leveraged loan market through a securitized format. The active management approach allows the portfolio managers to dynamically select securities based on credit analysis, market conditions, and relative value opportunities within the AAA CLO universe.
A significant feature of this investment is its floating-rate nature. CLOs are backed by pools of senior secured corporate loans, which typically have variable interest rates. Consequently, the income generated by the fund adjusts with changes in benchmark rates, offering a potential hedge against inflation and interest rate risk compared to traditional fixed-rate bonds. The fund's focus on the AAA tranche provides a defensive posture, as this layer has the first claim on cash flows from the underlying loan portfolio and benefits from substantial credit enhancement from the subordinated tranches below it, which absorb initial losses.
This particular share class is structured to distribute income to investors on a monthly basis, catering to those seeking regular cash flow. Furthermore, it incorporates a currency hedge, mitigating the impact of exchange rate fluctuations between the fund's base currency and the investor's reference currency. This makes the investment suitable for international investors who want to access the European CLO market without taking on direct foreign exchange risk. The strategy is generally appropriate for those looking to diversify their fixed-income allocation with an asset class that has historically shown low correlation to traditional bonds and equities, while prioritizing capital preservation through high credit quality.
