Palmer Square Capital Management launches two CLO credit ETFs

Asset manager Palmer Square Capital has launched two exchange traded funds (ETFs), both of which provide retail investors with access to structured credit markets. Palmer Square Credit Opportunities ETF (PSQO) and Palmer Square CLO Senior Debt ETF (PSQA) began trading today and the firm rang the opening bell at the New York Stock Exchange on Thursday to mark the occasion. 

PSQO is an actively managed multi-asset credit strategy, whereas PSQA is an indexed collateralised loan obligation (CLO) vehicle designed to provide access to triple-A and double-A tranches of the US CLO market.

The company said PSQO will enable investors to simplify portfolio construction and improve access to relative value opportunities across corporate and structured credit, including CLOs, investment grade and high yield corporate bonds, ABS and bank loans.

On the other end, PSQA gives passive access to the CLO market through a research-driven CLO Senior Debt Index (CLOSE) that creates an investable way of tapping into Palmer Square's capabilities within the senior tranches of the CLO market.

Chris Long, Palmer Square chair and CEO, said in a statement: "As the creator of the first public Senior and Debt CLO benchmarks in 2015 and our position as a top issuer in the global CLO market, we have laid the groundwork to continue providing investors with high-quality access to the landscape of credit assets through a multitude of products, which will now include ETFs."

The funds are the latest in a wave of ETF launches providing access to the CLO market. According to analysis published by PGIM in June, CLO ETF assets under management had – at the time – almost quintupled in value since 2023, reaching more than US$11bn. The following month, Janus Henderson's second CLO ETF reached $1 billion in AUM (SCI 15 July), further reinforcing the steady momentum behind ETFs.

In August, a CLO trader told SCI (SCI 12 August) that the resilience in the CLO market in the lead-up to summer was attributed to "substantial inflows into US ETFs and specialised European real money funds, which continued to buy despite tightening conditions."

Camilla Vitanza