Anyone who wants their ETF with more initials is in luck: the letters “CLO” are appearing more and more frequently next to fund names.
That is, exchange-traded funds with collateralized loan obligations. Recently, companies including Fidelity, Principal, Janus Henderson and Reckoner Capital Management have added or prepared new CLO ETFs to their product lines. The funds invest in pooled corporate loans of different credit quality. They are also something the industry does not want investors to combine with collateralized debt obligations (CDOs), the instruments strongly associated with the 2008 financial crisis.
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“In the alphabet soup of acronyms, it’s easy to associate CLOs with products like asset-backed securities (ABS), collateralized debt obligations (CDOs), and residential mortgage-backed securities (RMBS),” according to a new information page on Fidelity’s website. “But the real story is more nuanced. The biggest damage and losses came from subprime mortgage-backed securities, particularly mortgage-linked CDOs.”
new in town
Fidelity is new to the CLO ETF game, having launched its CLO and AAA CLO funds last week. However, the company has been issuing and investing in the products for more than 20 years, Harley Lank, its head of high income and alternatives, said in a statement. “Fidelity’s extensive research platform, proprietary data and credit market expertise give us the ability to evaluate opportunities in every phase of the market cycle, and CLOs continue to show sustained growth as investors seek new sources of income and diversification.”
In fact, the market for these types of products is growing, as data from Morningstar Direct shows:
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CLO ETFs represented a total of more than $40 billion in assets in the United States at the end of January, up from $27 billion a year earlier.
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Nearly $15 billion came into the funds in 2025, as well as more than $3 billion last month.
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Of the 27 ETFs currently listed, 10 have been launched since 2025.
More sets in the CLO set: Janus Henderson, which offers the largest CLO ETF in the US market, the $26 billion AAA CLO ETF, last year filed for another product, the AA-A CLO ETF. Principal Global Investors is preparing a similar product that could be available in April.
Another company, Reckoner Capital Management, launched four such funds last week, after introducing the first two last year. The four new products stand out from the rest because they limit distributions. Two reinvest dividends and the other two make the distributions annual (rather than monthly). “Our recently launched annual distribution and reinvestment CLO ETFs give investors the flexibility to tailor their cash flow requirements to their investment horizons and recognize distributions as taxable income when shares are sold,” Reckoner CEO John Kim said in an announcement.
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