Aegon AM adds CLO funds to alternatives offering

Aegon Asset Management (Aegon AM) has bolstered its alternative fixed income range with the launch of three European CLO Funds.

The trio of funds will invest across the full credit spectrum from AAA to sub-investment grade and are Luxembourg-domiciled UCITS offering daily liquidity.

Aegon AM – which manages €23bn in asset-backed securities (ABS) and CLOs globally – said the High Grade CLO, European CLO and European CLO Opportunities funds provide investors with access to opportunities within the rapidly growing European CLO market while offering an attractive yield potential.

The investment team has been investing in European CLOs since 2005, and in US CLOs since 1996, with dedicated CLO and ABS strategies managed for external clients since 2004, but says the asset class remains structurally underinvested in.

The new funds’ focus is on European CLOs, which Aegon says typically offer stronger credit quality than their US counterparts.

Aegon High Grade CLO invests in the highest quality CLO tranches (AAA and AA), with exposure to AA capped at 25%; Aegon European CLO invests across investment grade tranches, with an average credit quality of A/BBB but does not invest in non-investment grade CLOs; and Aegon European CLO Opportunities, available to institutional investors only, focuses on non-investment grade CLO tranches to target higher-yielding segments of the CLO market, offering enhanced return potential through exposure to lower-rated credit.

Frank Meijer, head of alternative fixed income and structured finance at Aegon AM, said: “We find the risk-return profile of European CLOs very attractive and believe the floating-rate nature of CLOs is particularly appealing in a time of possible interest rate volatility. As the scale of the market continues to grow, it’s been possible for us to set up scalable and diversified CLO funds across the rating spectrum.

“These new funds build on our experience investing across the CLO capital structure and respond to clear client demand for more tailored access, whether targeting higher quality income or looking further down the capital stack for enhanced returns over traditional credit.”

Erik den Hertog, head of client group, Continental Europe, added: “We are seeing strong client demand for alternative fixed income solutions that combine diversification with attractive income potential.

“The new funds provide tailored access to the European CLO market, helping clients capture opportunities across the credit spectrum in line with their investment objectives. Supporting clients in navigating this evolving asset class is central to our growth across Europe and beyond”.