Fair Oaks Capital, a specialist corporate credit manager, has listed the first European AAA CLO ETF on the London Stock Exchange with the ticker FAAA.
Trading commenced in both Euro and Sterling currencies, offering access to AAA-rated, floating-rate CLO notes. Fair Oaks initially listed the CLO ETF on Deutsche Börse Xetra on Sept. 11.
Fair Oaks AAA CLO ETF (FAAA) invests 100 per cent in AAA-rated CLOs, based on Fair Oaks’ established investment processes. It is managed by a team of six professionals, supported by the broader Fair Oaks credit team and led by Miguel Ramos Fuentenebro and Roger Coyle, co-founders and partners of the firm.
The target market for the ETF is European institutional and informed investors. The total expense ratio for the Fair Oaks AAA CLO ETF is 0.35 per cent. All assets are compliant with EU and UK securitisation (risk-retention) regulations – a requirement for EU and UK ‘institutional investors’ as defined in those regulations.
FAAA was launched on the Alpha UCITS fund platform as an additional listed share class of an existing Fair Oaks UCITS fund, the Fair Oaks AAA CLO Fund (the Fund). The Fund was launched with Alpha UCITS in 2019 and has over EUR150 million in assets under management (AUM) as of August 31, 2024. The ETF share class offers investors access to the existing high-quality, diversified portfolio. FAAA is a long-only portfolio with no leverage and is classified as Article 8 under the EU Sustainable Finance Disclosure Regulation (SFDR).
Ramos Fuentenebro says: “We’re pleased with the initial reception to the Fair Oaks AAA CLO ETF. For the first time, European ETF investors now have efficient access to AAA-rated CLOs, an asset class that has a record of no historical defaults and an attractive yield.”
“CLO ETFs have been tremendously successful in the U.S. as they offer investors a unique high quality, floating rate, short duration asset. The new London listing offers UK and European investors access to 100 per cent AAA-rated CLOs in an ETF wrapper for the first time in Euros and British pounds,” says Stephane Diederich, CEO of the Alpha UCITS fund platform.
