Muzinich launches AAA-rated CLO UCITS ETF

Muzinich & Co has launched the Muzinich AAA CLO UCITS ETF, the firm’s first European exchange-traded fund. The ETF gives investors exposure to AAA-rated collateralised loan obligation (CLO) bonds, with floating-rate coupons, daily liquidity and a total expense ratio of 25 basis points. The fund listed on Xetra in Frankfurt and uses the Waystone white-label UCITS platform.

The ETF holds senior, structurally protected AAA tranches of CLOs. These tranches receive priority on cash flows from underlying loan pools. With floating-rate coupons and very low duration, the product aims to provide income above money-market rates or short-term government bonds while limiting sensitivity to changes in interest rates.

The portfolio will be actively managed, with emphasis on risk control and credit selection focused on AAA-rated CLO bonds. Muzinich described the strategy as conservatively positioned to deliver investment-grade income from diversified loan cash flows.

Muzinich said Waystone’s UCITS framework provides regulatory oversight, risk management and operational support. The company plans to distribute the ETF in the UK, Austria, Belgium, Germany, France, Italy, Spain and Singapore.

Hugo Wheeler, Muzinich country manager, commented: ‘Investors are seeking cash-plus income solutions that can operate in a higher-for-longer rate environment. This ETF offers access to high-quality, floating-rate credit with a clear focus on capital preservation and transparency.’

Portfolio manager Sam McGairl added: ‘Our approach brings together experience in structured credit, leveraged loans and CLO structuring. The ETF gives clients a simple, liquid and transparent way to access that expertise.’ Tatjana Greil-Castro, global head of investments, noted the firm intends to build an ETF platform that complements its existing UCITS products.

Muzinich sets out its relevant track record in support of the strategy. The firm has managed leveraged loans since 2016, structured and managed about $3.5 billion of CLOs and has invested in AAA CLO bonds since 2019. Muzinich also cites more than 20 years of short-duration corporate credit experience across its team.

Muzinich described CLO issuance as a scalable source of floating-rate investment-grade credit and said the European CLO ETF market is less developed than in the US. The firm said manager selection and implementation are important for delivering outcomes to investors.

The ETF structure provides daily liquidity and standardised reporting typical of UCITS ETFs. Muzinich said the combination of senior tranche exposure, floating coupons and low duration is intended to reduce interest-rate volatility in returns compared with longer-duration fixed-income products. The firm also indicated plans to expand its ETF offerings over time to complement its UCITS business.