Riskier CLOs Are Coming to the Masses Via an ETF Buying BBB Debt

When the first ETFs tracking collateralized loan obligations arrived, worries about easing access to these complex securities were assuagedby the fact the funds targeted only the highest-rated debt.

Just over a year later the market is taking the next inevitable step: A fund loaded with loans rated BBB or lower is on the way.

Janus Henderson on Wednesday filed for the Janus Henderson B-BBB CLO exchange-traded fund (ticker JBBB). If approved, it’ll invest at least 80% of assets in securities rated from BBB+ to B-, according to the application.

That’s a big shift down the credit-quality scale compared to ...