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.
SEEK HIGHER INCOME WITH CLOs
Explore iShares CLO Active UCITS ETFs.
EUCL
iSHARES € AAA CLO ACTIVE UCITS ETF
CLOR
iSHARES $ AAA CLO ACTIVE UCITS ETF
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.
Video 02:09
Fund Innovators: What are CLOs?
If you've been hearing more about CLO ETFs and wondered what they are, you're not alone. We demystify this part of the bond market and share how bond ETFs are making it more accessible than ever.
For Professional Clients and Qualified Investors.
Capital at risk
Marketing material
If you've been hearing more about CLO ETFs and wondered what they are, you're not alone. Today, we’ll demystify this part of the bond market and share how bond ETFs are making it more accessible than ever.
So what exactly are CLOs, and is it true they sometimes spark debate?
[Maria] Let’s start with the basics!
CLO, or Collateralized Loan Obligation, is an investment vehicle backed by a pool of predominantly senior secured loans made to corporate borrowers. A CLO is split into tranches based on risk and return and then made available to investors. At the top is the AAA rated CLO tranche, the safest and most senior.
Sometimes CLOs get confused with CDOs (the collateralized debt obligations), tied to subprime mortgages before the 2008 financial crisis.
But here’s the key difference: CLOs are backed by corporate loans not consumer debt and proved far more resilient during market crises. More importantly, AAA CLO tranches have never defaulted, even during 2008 and 2020.
I will share another misconception, and it’s that CLOs are often seen as too risky for conservative portfolios, but the AAA tranche, the top of the capital structure, is usually stable and pays attractive yields relative to other investment-grade fixed income.
Do you want to know how ETFs changed the game for this asset class?
[Maria]
Well, we’ve seen some big changes recently.
Investing in CLOs was once limited to sophisticated professional investors with big capital, dealer access and the ability to analyze complex credit structures.
But the launch of CLO ETFs now gives a broader universe of investors access to this income-generating asset class in a diversified, liquid, and transparent format.
So you see these ETFs hold a diversified pool of CLO tranches, providing high yields, low default risk, and floating rate exposure to hedge against interest rate volatility.
You get daily liquidity and low-cost exposure, just like any ETF, without managing a CLO tranche portfolio yourself.
This document is marketing material: Before investing please read the Prospectus and the PRIIPs KID available on www.blackrock.com/it, which contain a summary of investors’ rights.
Risk Warnings
Capital at risk.
There can be no guarantee that the investment strategy can be successful and the value of investments may go down as well as up. 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. 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 or strategy. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time and depend on personal individual circumstances.
Important Information
This material is for distribution to Professional Clients (as defined by the Financial Conduct Authority or MiFID Rules) only and should not be relied upon by any other persons.
This is marketing material.
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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.