Retail investors may get a crack at CLO investing with new ETF

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Janus Henderson is planning to launch a new ETF that will give retail investors the ability to invest in collateralized loan obligations.

CLOs package leveraged loans and slice them up to sell them in securities that vary by risk and return. They’ve gained attention as an alternative to bonds, which have been trading at record low yields, but they’ve also attracted scrutiny as the pandemic triggers a wave of corporate distress.

Janus filed a preliminary registration statement with the SEC for the Janus Henderson AAA CLO ETF (JAAA), an actively managed ETF that’s expected to be the first of its kind in the industry.

Alternative Access Funds LLC filed for a CLO-focused ETF in late December, but it hasn’t yet started trading.

The investment objective of the fund will be to seek capital preservation and current income by seeking to deliver floating-rate exposure to high quality AAA-rated CLOs.

If all approvals are granted, the ETF is expected to start trading on or about Oct. 22, 2020.