Collateralised Loan Obligation ETFs

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Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

EUCL

iSHARES € AAA CLO ACTIVE UCITS ETF

VIew EUCL

CLOR

iSHARES $ AAA CLO ACTIVE UCITS ETF

View CLOR

Why ishares for AAA CLO active ETFs?

01.

Diversify income with a focus on quality

AAA-rated CLOs aim to combine high credit quality with low correlation to traditional asset classes,¹ making them valuable for investors seeking diversified income streams while seeking to maintaining a low risk profile.

02.

Leading investment expertise

Access BlackRock’s CLO capabilities, backed by a team that has managed over $33 billion in third-party investments since 2010.²

03.

Efficient ETF wrapper

The funds provide efficient access to CLOs with the added benefits of the ETF wrapper (access, daily liquidity, transparency, cost efficiency and exchange trading). Powered by iShares, the global leader in ETFs.³

The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index. Risk management cannot fully eliminate the risk of investment loss.

Learn more about CLOs

Collateralised Loan Obligations (CLOs) are investment products made up primarily of a pool of corporate loans. These loans are packaged together and divided into different tranches, which vary in risk and return: where there is a credit event, senior tranches (rated AAA, AA and A) get paid first and are safer. Junior (rated BBB and BB) or equity tranches are riskier but offer higher potential returns.

1. Diversify income with a focus on quality

AAA CLOs seek to offer diversified income by pooling exposure across loans. Their structure (AAA rated) enables investors to keep a focus on quality — strengthening or maintaining portfolio credit ratings — while still seeking higher yield.

2. Low duration

AAA CLOs pay a floating rate coupon that resets quarterly with risk-free rates, resulting in a low duration of approximately 0.25 years⁴ - offering potential protection in a changing interest rate environment.

3. Uncorrelated returns

AAA CLOs are relatively uncorrelated with traditional fixed income, meaning their returns don’t closely track those of core bonds — based on five-year return correlations to the Global Aggregate Index.⁵

The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product.

CLOs can offer attractive yields and diversification, but they also come with risks investors need to consider:

1. Credit risk

CLOs are backed by leveraged loans which are typically below investment grade. If borrowers in the loan pool default, the cash flows to CLO investors may be reduced.

2. Liquidity risk

CLO tranches (especially the lower rated) are less liquid than traditional bonds or ETFs. Selling in stressed markets can be difficult or require steep discounts.

3. Spread risk

CLO valuations are sensitive to credit spreads. If spreads widen (e.g. during recessions or market stress), CLO prices can drop even if the underlying loans don’t default.

4. Interest rate risk

CLO loans and tranches are generally floating-rate, which reduces duration risk. However, higher rates can pressure loan issuers (borrowers), leading to higher default risk.

5. Regulatory risk

CLOs are subject to evolving banking and securities regulations (e.g. risk retention rules, capital treatment). Regulatory changes can affect issuance, liquidity or investor demand.

1. Access

Traditionally CLOs were only available to large institutional investors through complex, illiquid tranches.
With the launch of CLO ETFs, all types of professional investors can now gain exposure to CLOs in a simpler, exchange-traded format.

2. Liquidity and transparency

CLO ETFs trade on stock exchanges, offering daily liquidity, unlike traditional CLOs that are difficult to buy or sell quickly.
They provide transparency through regular reporting of holdings and pricing, reducing the opacity of traditional CLO structures.

3. Diversification

Instead of selecting individual CLO tranches, investors get instant diversification across multiple CLO deals and managers.
ETFs often focus on investment-grade (AAA/AA) CLO tranches, making the product more accessible and suitable for a wider range of investors.

Risk: Diversification and asset allocation may not fully protect you from market risk.

4. Lower barriers to entry

ETFs remove the need for specialised expertise, large minimum investments or complex due diligence.
Investors can access the CLO market with the same ease as buying a stock or bond ETF.

5. Cost efficiency

CLOs were traditionally complex and costly, limiting access to only the largest investors.
Now ETFs provide a simple, transparent and cost-efficient entry point for all investor types — offering access to CLOs at just a fraction of the cost compared to traditional mutual funds or investing in single CLO tranches.

Related insights

Demystifying Collateralised Loan Obligations

CLO Active ETFs Product Brief

¹Bloomberg, BlackRock, JP Morgan as of 30 June 2025. This statement is based on return correlation analysis over the period of last 5 years using the indices Bloomberg Global Aggregate Corporate Index, Bloomberg Global Aggregate Government Index, Bloomberg Global Aggregate Securitised Index, Bloomberg Pan European High Yield Index, Bloomberg US High Yield Corporate Index, JP Morgan CLO EUR AAA Index, JP Morgan CLO USD AAA Index.

²BlackRock Global Business Intelligence as of 30 June 2025.

³Morning Star as of 15 July 2025.

⁴Bloomberg as 30 June 2025. Statement based on data of Bloomberg US High Yield Corporate Index, JP Morgan CLO EUR AAA Index, JP Morgan CLO USD AAA Index.

⁵Bloomberg, BlackRock, JP Morgan as of 30 June 2025. This statement is based on return correlation analysis over the period of last 5 years using the indices Bloomberg Global Aggregate Corporate Index, Bloomberg Global Aggregate Government Index, Bloomberg Global Aggregate Securitised Index, Bloomberg Pan European High Yield Index, Bloomberg US High Yield Corporate Index, JP Morgan CLO EUR AAA Index, JP Morgan CLO USD AAA Index.

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