The Luxembourg Stock Exchange is pleased to confirm the listing of Fair Oaks Capital’s trailblazing CLO ETF on the regulated Bourse de Luxembourg market on 6 February. The new GBP-hedged share class has been created under the Fair Oaks AAA CLO sub-fund on the Alpha UCITS SICAV fund platform.

The Fair Oaks AAA CLO fund invests long-only and exclusively in AAA-rated collateralised loan obligations (CLOs), based on Fair Oaks’ established investment processes. The CLO-focused fund furthermore complies with ESG investment restrictions and is classified as Article 8 under the EU Sustainable Finance Disclosure Regulation (SFDR).

“The addition of the industry’s first GBP hedged option to access AAA-rated CLOs will enable additional investors to consider the asset class as an alternative for fixed-rate products such as investment grade corporate bonds”, Miguel Ramos Fuentenebro, Partner at Fair Oaks Capital, commented, “all while benefiting from a track record of considerably lower volatility over the last 5 years, on account of their minimal interest rate risk. AAA-rated CLOs have a history of zero defaults and offer attractive yields, with a considerably higher spread than investment-grade corporates.”

Europe’s leading fund centre

As the second largest fund centre in the world after the United States, Luxembourg has a fund industry that currently holds more than EUR 5.8 trillion in assets under management according to figures from the Association of the Luxembourg Fund Industry (ALFI). The financial centre has put in place a number of initiatives and is becoming an increasingly attractive domicile for active ETFs. As a leading listing venue for a wide array of investment funds, including UCITS, AIFs and ETFs, the Luxembourg Stock Exchange has built up a unique experience in fund listings and is now increasing its focus on actively managed exchange traded funds.

“We are pleased to welcome this pioneering fund from Fair Oaks Capital to the Luxembourg Stock Exchange. This is a testament to our unique expertise in the listing of investment funds and the fast time-to-market we provide to Luxembourg-domiciled regulated funds. A listing at LuxSE furthermore serves to boost the fund’s liquidity on secondary markets,” commented Arnaud Delestienne, Director of International Capital Markets and Member of the Executive Committee at LuxSE.

A LuxSE Partner, Luxembourg-based law firm Elvinger Hoss Prussen advised Fair Oaks Capital in connection with the listing of this fund at LuxSE.

“Luxembourg has recently taken measures to enhance the framework for actively managed ETFs, such as the relaxation of portfolio transparency rules and the abolition of the subscription tax. The listing process of the Fair Oaks AAA CLO ETF on the Luxembourg Stock Exchange was smooth and timely, accelerating the admission on other venues and facilitating the development of a secondary market liquidity in Europe,” added Yves Elvinger, Partner at Elvinger Hoss Prussen.

Pioneering the European CLO ETF market

Fair Oaks Capital established the FAAA CLO ETF in Luxembourg in September 2024, becoming the first investment manager to launch a European-domiciled CLO ETF. This specific type of investment fund offers investors across Europe access to a diversified portfolio of CLOs in an actively managed exchange traded fund, bringing diversification to traditional, fixed-income portfolios. The ETF format allows for efficient and flexible trading while offering investors a higher level of transparency.

Established in 2013 and operating from London and New York, Fair Oaks Capital specialises in CLOs and secured loans, currently managing USD 3 billion in assets for a global client base.

Source: LuxSE