BofA: US CLO ETFs surge past $50B in AUM; inflows total $10B YTD
Total assets under management in CLO ETFs have surpassed $50 billion, as their outperformance versus other fixed-income ETFs continues to attract new retail and institutional investors, according to a new report from BofA Securities.
US CLO ETF AUM crossed $50 billion in the week ended July 2, powered by an estimated $10 billion of inflows in the first half of 2026, including about $1.5 billion in June and $4.8 billion in the second quarter alone, the July 6 report stated.
BofA said roughly $44.5 billion of the total is concentrated in US-listed ETFs that focus on CLO securities rated from AAA to A, with a further $2.7 billion in BBB and below CLO ETFs, $2.7 billion in foreign-domiciled CLO funds that invest heavily in US deals, and about $200 million in private credit CLO ETFs.
EU-listed CLO ETFs recently surpassed €2 billion in assets, underscoring the global expansion of the product set.
Analysts at the bank believe investors are rotating from loan funds and traditional fixed-income mutual funds and ETFs into CLO ETFs, drawn by the higher risk-adjusted returns delivered by some of the category’s largest vehicles from Janus Henderson, Blackstone and PGIM — the latter of which last month launched two new funds.
“AAA focused CLO ETFs have seen one of the highest returns YTD across fixed-income ETFs and have one of the highest Sharpe ratios,” the research note stated. “We continue to expect rotation out of loan ETFs into AAA CLO ETFs — higher returns on floating rate collateral with a much lower risk profile (AAA vs single B risk).”
BofA highlighted four flagship CLO ETFs — two from Janus Henderson (NYSE Arca: JAAA and JBBB), Blackstone’s iShares AAA CLO Active ETF (CLOA) and PGIM AAA CLO (PAAA) that have each delivered about 2.3–2.4% YTD total returns, placing them among the top performers across the fixed-income ETF universe.
Those funds have beaten Invesco Senior Loan ETF (BKLN) by roughly 2.1–2.3 percentage points so far this year, according to the bank. The same strategies also screen near the top of BofA’s Sharpe ratio league tables (a standard measure for risk-adjusted return), with JAAA, CLOA and PAAA posting YTD Sharpe ratios in a range of about 1.3 to 2.8, well above many Treasury, investment-grade and high-yield corporate, loan and securitized product ETFs.
Beyond traditional fixed-income allocations, BofA’s analysts also see evidence that some money market funds have begun allocating a slice of capital into CLO ETFs, attracted by the combination of low interest-rate duration and relatively higher carry versus short-dated Treasuries.
The rapid growth of the category has been led by large AAA CLO ETFs from managers such as Janus Henderson and PGIM. The largest, Janus Henderson AAA CLO ETF (JAAA), has accumulated roughly $29 billion in assets as of July 8, including a surge of nearly $5 billion of inflows since mid-June.
PGIM launches new CLO ETFs
It was unclear from the BofA data whether the $50 billion AUM figure includes two funds recently launched by PGIM, which managed $10.3 billion in AUM with PAAA.
On June 11, PGIM — the $1.4 trillion global asset management arm of Prudential Financial — launched the PGIM AAA CLO Aggregate Duration ETF (AAAD) and PGIM Securitized Income ETF (Cboe BZX: PINC), offering new ways to combine AAA CLO and diversified securitized credit exposure in ETF form.
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“The volatility in rates and the volatility in duration has overwhelmed the income benefit from traditional bond investing,” said Matt Collins, PGIM’s head of ETFs, in an interview with LCD. Investors have been “looking for something that gets them out of the duration whipsaw and gives them clarity around income.”
AAAD is structured to maintain a “core like” duration profile close to that of the broad US bond market while delivering the spread and structural protections of AAA CLO tranches. The fund primarily invests in US dollar AAA rated CLO notes directly or through holdings of PAAA, according to a PGIM news release, and uses longer duration fixed-income instruments and derivatives — including futures, forwards, options, swaps and US Treasury futures — to manage and extend portfolio duration past that of its underlying CLO exposure.
PINC invests across the securitized credit spectrum, including CLOs, mortgage-backed and asset-backed securities and related derivatives, high-yield bonds, and loans — providing diversified securitized and asset-backed exposure with its own active duration overlay.
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This article originally appeared on PitchBook News