Eldridge Expands Actively Managed CLO ETF Suite with Launch of UCITS ETF

Eldridge, an asset management and insurance holding company with approximately $74 billion in assets under management, today announced the expansion of its exchange-traded fund (“ETF”) offering with the launch of its first actively managed fixed income ETF in Europe: the Eldridge AAA CLO UCITS ETF (ticker: TAAA). TAAA draws on Eldridge’s structured credit capabilities and is designed to provide investors and allocators with a compelling investment option when building portfolios. Launching this strategy can address an increasing market demand for access to the asset class in an accessible ETF wrapper, in accordance with UCITS regulations, giving international investors access to USD-denominated AAA CLO liabilities without U.S. withholding taxes.

Targeted at sophisticated investors who are not U.S. taxpayers, TAAA seeks to generate current return income and capital preservation by investing in high quality U.S. dollar-denominated AAA-rated CLO bonds. This corner of the corporate credit market has a long-standing, robust historical track record, with the lowest level of expectation for default risk. With TAAA, investors can now gain access to a diverse pool of AAA-rated CLO bonds, which can offer higher yields than other similarly rated investments. Additionally, AAA-rated CLO bonds are typically less correlated to traditional stocks and bonds than other credit assets.

“Building on Eldridge’s heritage as investment specialists in the CLO space, we are excited to introduce this new solution to investors globally,” said Tarek Barbar, Co-Portfolio Manager of TAAA. “The Eldridge AAA CLO UCITS ETF has potential to enhance clients’ portfolios by offering consistent stable levels of floating rate income.”

Key features of the Eldridge AAA CLO UCITS ETF:

• Potential for Consistent Income: TAAA expects to pay a monthly dividend to investors, offering consistent income derived from floating-rate payments based on 3-month SOFR and credit spreads.
• Capital Preservation: TAAA seeks to provide investors access to high-quality U.S. dollar-denominated AAA-rated CLO bonds with robust historical performance and a zero-default track record.
• Broad Exposure: TAAA can provide investors with exposure to a diverse portfolio of industries, companies, and institutional loan managers offering higher potential returns than traditional fixed-income investments.
• Active Management by CLO Experts: TAAA is actively managed by Eldridge’s team of CLO investment specialists, managing one of the largest CLO investment portfolios.

“We are committed to delivering competitive risk-adjusted returns through our rigorous due diligence and portfolio construction process,” said Andrew Ward, Co-Portfolio Manager of TAAA. “The Eldridge AAA CLO UCITS ETF reflects that very commitment and will seek to provide global investors access to the highest quality AAA-rated CLO bonds.”

TAAA is the latest addition to Eldridge’s actively managed fixed income ETF suite, which also include the Eldridge AAA CLO ETF (CLOX) and Eldridge BBB-B CLO ETF (CLOZ).

The ETF listed on Deutsche Börse Xetra on March 5 with a total expense ratio of 0.35%. Furthermore, it is regulated by the Commission de Surveillance du Secteur Financier (CSSF). The CSSF is the main financial regulatory authority in Luxembourg. Waystone Management Company (Lux) S.A. acts as UCITS Management Company to this fund, with Waystone also providing specialist ETF and ancillary services to the SICAV. To learn more about the fund, please visit taaafund.com.

About Eldridge

Eldridge is an asset management and insurance holding company with approximately $74 billion in assets under management that consists of two divisions: Eldridge Capital Management and Eldridge Wealth Solutions. Eldridge Capital Management, through its subsidiaries, focuses on four investment strategies – diversified credit, GP solutions, real estate credit, and sports & entertainment. Eldridge Wealth Solutions, an insurance and retirement solutions platform, is comprised of Eldridge’s wholly owned insurance companies, Security Benefit and Everly Life. Headquartered in New York, Eldridge has offices in Atlanta, Beverly Hills, Chicago, Dallas, Des Moines, Greenwich, London, Overland Park, Singapore, and Topeka. Eldridge is wholly owned by Eldridge Industries. To learn more about Eldridge, please visit eldridge.com.

Important Risks

The risks of investing in CLO securities include both the credit risk associated with the underlying loans combined with the risks associated with the CLO structure governing the priority of payments (and any legal and counterparty risk associated with carrying out the priority of payments). This ETF intends to invest primarily in AAA-rated rated tranches (or equivalent ratings by a NRSRO); however, these ratings do not constitute a guarantee of credit quality and it’s possible that under stressed market environments these tranches could experience substantial losses due to actual defaults, write-downs of the equity or other subordinated tranches, increased sensitivity to defaults due to collateral default and impairment of subordinate tranches, market anticipation of defaults, and general market aversion to CLO securities as an asset class. The most common risks associated with investing in CLOs are interest rate risk, credit risk, liquidity risk, prepayment risk (i.e., the risk that in a declining interest rate period CLO tranches could be refinanced or paid off prior to their maturities and the ETF would then have to reinvest the proceeds at a lower rate), and the risk of default of the underlying assets.

TAAA is a recently organized investment company with no operating history. As with all ETFs, shares of TAAA may be bought and sold in the secondary market at market prices. Although it is expected that the market price of shares of the ETF will approximate the intraday value of TAAA’s holdings used to calculate TAAA’s NAV, there may be times when the market price is more than the intra-day NAV (premium) or less than the intra-day NAV (discount), which may result in a widening of the bid and ask spread, due to supply and demand of shares or during periods of market volatility. This risk is heightened in times of market volatility, periods of steep market declines, and periods when there is limited trading activity for shares in the secondary market, in which case such premiums or discounts may be significant. Unlike other ETFs, TAAA expects to affect most of its creations and redemptions primarily for cash, rather than in-kind securities. Cash purchases and sales may cause the ETF to incur portfolio transaction fees, gains or losses on the sales, or charges or delays in investing the cash that it would otherwise not incur if a purchase or sale was made on an in-kind basis. TAAA’s investment in debt securities may subject it to liquidity risk, interest rate risk, floating-rate obligations risk, call risk, and extension risk.

This is a marketing communication and should not be construed as investment advice. It is not an offer to sell or a solicitation to buy any investment. This document is intended solely for Professional Clients (as defined by MiFID rules) and Qualified Investors. It should not be relied upon by anyone else.

Eldridge or any connected party to the ETF shall not be held responsible for any damages or losses resulting from the use of any information contained within this publication, or from any inaccuracies or incompleteness in it. No guarantee of accuracy is given, and no liability is accepted for any errors or omissions. The information in this document may change without notice and should not be used as a basis for investment decisions.

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