Franklin Templeton has launched its first ETF that invests in collateralized loan obligation debt tranches, as the company looks to tap into growth in the alternative asset class.
The Franklin BSP CLO ETF (Ticker: YCLO) is an actively managed fund that aims to seek capital preservation and current income though CLO debt tranches in U.S. and European markets, according to the giant asset manager. The ETF is managed by Franklin Advisers, Inc., with sub-advisory services provided by Benefit Street Partners.
YCLO is also BSP’s first ETF. “The CLO market and its investor base have continued to grow, while performance across CLO securities has become more differentiated in today’s market environment,” said Brandon Chao, portfolio manager, at BSP Structured Credit, in a statement. “This creates opportunities for BSP to apply its global relative value approach and active risk management within an ETF structure.”
The CLO ETF asset class has become one of the fastest-growing corners of the ETF market, according to the London Stock Exchange Group. In the first six weeks of 2026, net inflows totaled $4 billion, the LSEG said recently; that pushed global assets in CLO ETFs above $35 billion, which meant assets in the category had more than doubled year-on-year.
More and more CLO ETF offerings are coming to market as investor appetite broadens. Earlier this year Fidelity made its debut in the CLO ETF space with a pair of active ETFs that split investor exposure between AAA-rated and lower-rated CLO tranches.
Last year Nuveen, the investment manager for TIAA, also launched an ETF targeting the CLO asset class. Other products in the category include the Janus Henderson AAA CLO ETF (Ticker: JAAA) and the VanEck CLO ETF (Ticker: CLOI).
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