New CLO ETFs Launch Amid Bankruptcy-Sparked Pullback
It might seem like a delicate time to launch a collateralized loan obligation ETF.
This month, investors have pulled more than $1 billion from CLO exchange-traded funds in the US, which appears to be the fallout from the September implosions of two companies: Subprime auto lender Tricolor Holdings and auto parts firm First Brands Group. That has led credit managers, including JPMorgan (which lost $170 million related to Tricolor’s bankruptcy), to quickly reassess the corporate debt they hold. It also hasn’t helped that two banks recently reported millions of dollars in losses due to potential fraud on distressed commercial mortgages. Still, one new entrant in the ETF market dove in head-first last Wednesday, launching its second…
