Fair Oaks launches GBP-hedged share class of CLO ETF

Fair Oaks Capital has launched a sterling hedged share class of its European AAA CLO ETF, which is expected to list on the London Stock Exchange on 10 February.

This adds an additional share class to Fair Oaks AAA CLO ETF offering, which launched in September 2024, pioneering access to AAA-rated, floating-rate CLO notes in an ETF wrapper to European investors.

The newly launched hedged share class is also the first of its kind, expanding the offering to GBP investors in an accessible format, with currency hedging and a lower denomination of 10 GBP per share.

The portfolio management team, led by Miguel Ramos Fuentenebro and Roger Coyle, has been managing the fund, exclusively investing in European senior CLOs, since 2019.

The team’s experience managing CLO portfolios has allowed Fair Oaks to open access to this asset class to a wider range of investors in an actively-managed fund.

Ramos Fuentenebro said: “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, 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”.

The Fair Oaks CLO ETF 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, initially launched in 2019. The Fund invests exclusively in AAA-rated CLOs, based on Fair Oaks' established investment processes. FAAA is a long-only portfolio with no leverage and is classified as Article 8 under the EU Sustainable Finance Disclosure Regulation (SFDR).

The total expense ratio for the GBP hedged share class of the Fair Oaks AAA CLO ETF is 0.35%.