CLO ETFs Attract $6bn While Leveraged Loan Funds Shed $3.9bn
US leveraged loan funds saw outflows of $3.9bn in March, reducing AUM to $93.3bn and marking an eighth straight monthly decline. Meanwhile, CLO ETFs attracted nearly $6bn in year-to-date inflows as AAA tranches benefited from an up-in-quality bias and outperformed leveraged loan peers.
1. Q1 Outflows in Leveraged Loan Funds
US leveraged loan ETFs, mutual funds and closed-end funds saw combined AUM drop by $3.9bn in March to $93.3bn, marking the eighth consecutive monthly contraction and a $17.7bn decline since last summer. Outflows in the first quarter exceeded $7bn.
2. CLO ETF Inflows and Performance
US CLO ETFs have pulled in nearly $6bn of net inflows year-to-date, driven by investor demand for AAA tranches and an up-in-quality bias. These ETFs have outperformed major leveraged loan and investment-grade ETFs over the same period.
3. Secondary Market Pricing and Rate Outlook
Leveraged loan bid prices stabilized in March, rising four basis points to 94.63, then gained 67 basis points in April to 95.30 as of April 28. The Fed’s decision to pause rate cuts has supported floating-rate loan yields alongside rising Treasury yields.