Actively managed ETF is sub-advised by PineBridge Investments, a leader in the CLO market.
Fund aims to provide opportunities for enhanced yield, lower interest rate sensitivity than other fixed income investments historically, and the benefits of built-in structural risk protections; launch comes as interest rates and bond market volatility are on the rise.
VanEck today announced the launch of the VanEck CLO ETF (CLOI), designed to provide exposure to the $1 trillion collateralized loan obligation (CLO) market through an actively managed fund sub-advised by PineBridge Investments, a private, global asset manager focused on active, high-conviction investing.
“The growth of the CLO market has been driven by the benefits they provide, including enhanced yields versus equivalently rated bonds and loans and their considerable structural protections. In today’s rising rate environment, the floating rate coupons of CLOs make them particularly attractive,” said William Sokol, Senior ETF Product Manager at VanEck. “We’re excited to launch CLOI with PineBridge at a time when investors looking for enhanced income and risk protection have few options.”
“Our institutional clients have understood the strong value proposition of our CLO strategies for more than 20 years, and we are looking forward to extending access to this market to a broader investor base,” said Laila Kollmorgen, Portfolio Manager, CLO Tranche, at PineBridge Investments. “I’m looking forward to partnering with VanEck on this strategy, which aims to allow investors to combine the value of CLOs with the transparency, liquidity and costs benefits of an ETF.”
CLOI exposure focuses primarily on investment grade CLOs. The ETF combines VanEck’s leadership in income-focused investment solutions with the established active management of PineBridge, a $146 billion private global asset manager focused on active, high conviction investing across various asset classes. PineBridge is both a CLO manager and an active investor in CLO tranches, and leverages a rigorous, time-tested investment process with disciplined portfolio construction, robust risk management, and a foundation in credit-intensive research. PineBridge has extensive sub-advisory experience with $13.6 billion in sub-advised assets as of March 31, 2022.
“We believe this new strategy will be an attractive and timely complement to our income solutions lineup, which includes differentiated, enhanced and less correlated sources of yield relative to traditional fixed income asset classes. We believe CLOI will allow investors of all types to potentially benefit from the relatively high income, risk protections and floating rate exposure that CLOs provide,” added Ed Lopez, Head of Product Management at VanEck.
CLOI joins VanEck’s lineup of innovative, alternative income ETFs that also includes the VanEck Investment Grade Floating Rate ETF (FLTR), an ETF that invests in U.S. denominated floating rate notes issued by corporate issuers and rated investment grade, VanEck Fallen Angel High Yield Bond ETF (ANGL), which offers exposure to high yield bonds originally issued as investment grade, and VanEck BDC Income ETF (BIZD), which invests in publicly traded business development companies.
CLOI is listed on the NYSE and has a total expense ratio of 0.40%.
VanEck has a history of looking beyond the financial markets to identify trends that are likely to create impactful investment opportunities. We were one of the first U.S. asset managers to offer investors access to international markets. This set the tone for the firm’s drive to identify asset classes and trends – including gold investing in 1968, emerging markets in 1993, and exchange traded funds in 2006 – that subsequently shaped the investment management industry.
Today, VanEck offers active and passive strategies with compelling exposures supported by well-designed investment processes. As of May 31, 2022, VanEck managed approximately $78.3 billion in assets, including mutual funds, ETFs and institutional accounts. The firm’s capabilities range from core investment opportunities to more specialized exposures to enhance portfolio diversification. Our actively managed strategies are fueled by in-depth, bottom-up research and security selection from portfolio managers with direct experience in the sectors and regions in which they invest. Investability, liquidity, diversity, and transparency are key to the experienced decision-making around market and index selection underlying VanEck’s passive strategies.
Since our founding in 1955, putting our clients’ interests first, in all market environments, has been at the heart of the firm’s mission.
About PineBridge Investments
PineBridge Investments is a private, global asset manager focused on active, high-conviction investing. We draw on the collective power of our experts in each discipline, market, and region of the world through an open culture of collaboration designed to identify the best ideas. Our mission is to exceed clients’ expectations on every level, every day. As of 31 March 2022, the firm managed US$146.0 billion across global asset classes for sophisticated investors around the world.
An investment in the VanEck CLO ETF (CLOI) may be subject to risks which include, among others, Collateralized Loan Obligations (CLO), debt securities, LIBOR Replacement, foreign currency, foreign securities, investment focus, newly-issued securities, extended settlement, affiliated fund, management, derivatives, cash transactions, market, Sub-Adviser, operational, authorized participant concentration, new fund, absence of prior active market, trading issues, fund shares trading, premium/discount, liquidity of fund shares, non-diversified, and seed investor risks. The Fund may also be subject to liquidity, interest rate, floating rate obligations, credit, call, extension, high yield securities, income, valuation, privately-issued securities, covenant lite loans, default of the underlying asset and CLO manager risks, all of which may adversely affect the Fund.
An investment in the VanEck Investment Grade Floating Rate ETF (FLTR) may be subject to risk which includes, among others, foreign securities, foreign currency, investing in Japanese and United Kingdom issuers, credit, interest rate, floating rate, floating rate LIBOR, restricted securities, financial, market, operational, sampling, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified and concentration risks, all of which may adversely affect the Fund.
An investment in the VanEck Fallen Angel High Yield Bond ETF (ANGL) may be subject to risk which includes, among others, high yield securities, foreign securities, foreign currency, credit, interest rate, restricted securities, market, operational, call, Consumer staples, consumer discretionary, energy, communications, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified and concentration risks, all of which may adversely affect the Fund.
An investment in VanEck BDC Income ETF may be subject to risks of investments in business development companies (BDC). BDCs invest in private companies and thinly traded securities of public companies, including debt instruments of such companies. Generally, little public information exists for private and thinly traded companies and there is a risk that investors may not be able to make fully informed investment decisions. Less mature and smaller private companies involve greater risk than well-established and larger publicly traded companies. Investing in debt involves risk that the issuer may default on its payments or declare bankruptcy and debt may not be rated by a credit rating agency. Many debt investments in which a BDC may invest will not be rated by a credit rating agency and will be below investment grade quality. These investments have predominantly speculative characteristics with respect to an issuer's capacity to make payments of interest and principal. BDCs may not generate income at all times. Additionally, limitations on asset mix and leverage may prohibit the way that BDCs raise capital. The VanEck BDC Income ETF (BIZD) and its affiliates may not own in excess of 25% of a BDC's outstanding voting securities which may limit the Fund's ability to fully replicate its index. An investment in the Fund may be subject to risks which include, among others, investment restrictions, financial sector, small- and medium-capitalization companies, equity securities, market, operational, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, issuer-specific changes and concentration risks. Small- and medium-capitalization companies may be subject to elevated risks.
Investing involves substantial risk and high volatility, including possible loss of principal. Bonds and bond funds will decrease in value as interest rates rise. An investor should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
Chris Sullivan/Julia Stoll