State Street Investment Management today listed a new variant of its ETF focused on European collateralized loan obligations (CLOs) on the London Stock Exchange.
Article created by the editorial staff of ETFWorld.co.uk
Anna Paglia, Chief Business Officer at State Street Investment Management
The State Street® Blackstone Euro AAA CLO GBP Hdg UCITS ETF (Dist) , with ISIN code IE000Q8ZHWI1, joins the existing accumulating version, offering investors the option to receive periodic coupon payments.
The new instrument, fully hedged to sterling, has a total expense ratio (TER) of 0.30%. The strategy remains identical to its accumulating counterpart: generating risk-adjusted returns through a combination of income and capital growth over the long term.
Strategy and portfolio construction
The product is actively managed and invests up to 100% of its assets in euro-denominated debt tranches issued by CLOs. Exposure is limited to securities with AAA ratings (assigned by at least two recognised rating agencies), which represent the most senior and protected part of a CLO’s capital structure.
Portfolio construction follows precise rules:
- At least 85% must be invested in AAA-rated tranches.
- Up to 15% may be allocated to AA-rated tranches.
- Should a security be downgraded after purchase, the sub-investment manager (Blackstone LiquidCredit Strategies LLC) will take steps to sell it as soon as reasonably practicable.
- The fund does not invest in the most subordinated (equity) tranches.
- Strict diversification applies: no more than 5% of net assets in securities issued by any single CLO, and no more than 15% in CLOs managed by the same manager.
The fund may hold up to 15% in securities denominated in currencies other than the euro and uses financial derivative instruments solely for efficient portfolio management.
A growing market
Today’s listing is not an isolated case. The European CLO market is experiencing significant development, with issuance expected to exceed €50 billion by the end of 2025. The floating-rate structure of CLO tranches makes them particularly attractive in volatile interest rate environments, offering natural hedging against interest rate risk.
State Street has retained Blackstone as sub-investment manager, entrusting active security selection to one of the largest global credit operators, with nearly 25 years of specific experience in this segment.
Data on the fund’s accumulating version (ISIN IE000VU9AUN9) shows approximately €199 million in total assets as of 13 March 2026, with a portfolio comprising 60 positions and an average duration of 12.52 years. The portfolio’s effective credit quality stood at 100% in AAA-rated securities.
What are CLOs
CLOs are instruments that pool a diversified portfolio of leveraged loans (loans to corporations) and repackage them into different tranches with varying risk-return profiles. The senior (AAA) tranches are first to receive payments and last to absorb any losses, offering structural protection that has historically recorded no defaults for securities with this rating.
| ETF | State Street® Blackstone Euro AAA CLO GBP Hdg UCITS ETF (Dist) |
| ISIN | IE000Q8ZHWI1 |
| SEDOL | BW9L3X1 |
| Currency | GBP |
| Management Fee | 0.30% |
| Dividends | Distribution |
Source: ETFWorld.co.uk
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