CIBC Asset Management Launches Income Advantage Fund (CCLO): Unlocking Access to High-Quality CLOs
CIBC Asset Management’s new ETF CCLO offers retail investors access to high-yield, low-risk AAA-rated CLOs, long reserved for institutions.
Once the preserve of banks, insurance companies, and pension funds, Collateralized Loan Obligations (CLOs) are now accessible to a broader range of investors - thanks to the growing adoption of CLO exchange-traded funds (ETFs). These vehicles offer a unique way to capture higher income potential without sacrificing credit quality, all within a liquid, transparent structure.
A Refresher: What Are CLOs?
CLOs are structured credit products that bundle together hundreds of corporate bank loans - typically made to large, well-known companies - to fund operations, expansion, or refinancing.
These loans are grouped and securitized into tranches with varying degrees of risk and return.
At the top of this structure sit the AAA-rated tranches, which receive priority on interest and principal payments and are considered the most secure. Notably, these senior tranches have exhibited near-zero default rates, even during major economic downturns like the 2007–2009 Global Financial Crisis and the COVID-19 pandemic.
Today, the CLO market has grown to more than $1.1 trillion, surpassing the size of Canada’s entire federal bond market. With over 60% of market assets concentrated in AAA-rated securities, CLOs offer an appealing combination of income, diversification, and capital preservation - a profile that continues to attract sophisticated institutional investors.
CLOs Meet ETFs
The launch of CLO ETFs has opened the door for retail and advisor-led portfolios to tap into this resilient asset class. These ETFs provide diversified exposure to high-quality CLO tranches - particularly AAA-rated segments - while maintaining the daily liquidity, transparency, and cost efficiency that investors expect from ETFs.
Since the introduction of the first U.S.-listed CLO ETF in September 2020, the category has grown rapidly, amassing more than US$30 billion in global assets, according to Trackinsight. This surge reflects growing demand for alternative income solutions that can navigate a challenging rate environment.
Funds like CIBC Income Advantage Fund – ETF Series (CCLO) are helping to democratize access to the CLO market, offering Canadian investors a new way to generate income while managing credit and interest rate risk.
How the CCLO ETF Works
CCLO is an actively managed strategy designed to provide high monthly income and capital preservation through exposure to high-quality, floating-rate U.S. Collateralized Loan Obligations (CLOs).
The ETF primarily invests in AAA-rated CLO tranches, the most secure segment of the CLO capital structure, with selective exposure to AA- and A-rated tranches (up to 20%) to enhance yield.
By focusing on floating-rate securities, CCLO aims to mitigate interest rate risk while capturing income opportunities in a rising rate environment.
These CLOs are typically issued by top-tier global managers, including Ares, Blackstone, and Apollo, ensuring strong credit underwriting and robust structural protections.
To manage currency exposure, the fund employs a comprehensive hedging strategy that seeks to protect Canadian investors from fluctuations in non-CAD currencies.
Backed by CIBC Asset Management’s seasoned fixed income team, the portfolio benefits from over 50 years of credit research expertise. The team conducts multi-layered due diligence across individual loans, CLO managers, and portfolio diversification - ensuring disciplined risk management and broad credit exposure.
CCLO ETF Key Features
- 80–100% in AAA-rated CLOs, with up to 20% in AA/A-rated tranches
- Monthly distributions
- CAD-hedged exposure
- Low risk rating
- 0.30% management fee
CCLO is benchmarked against the J.P. Morgan US CLOIE AAA Index (CAD-Hedged) and is managed by a team of experienced portfolio managers and credit analysts, ensuring that every investment aligns with the fund’s high-quality standards and income objectives.
Why Investors Should Consider the CCLO ETF
CCLO offers a powerful combination of yield, quality, and risk management, making it a timely addition to today’s fixed income portfolios.
- Enhance Income Potential: CCLO targets higher-yielding opportunities by investing in a diversified portfolio of AAA-rated CLOs, helping investors build a more robust income stream in an evolving rate environment.
- Access Top-Tier Credit Quality: The fund provides exposure to high-quality, institutionally favored CLO tranches, widely regarded for their strong credit profiles and lower default risk compared to many traditional bonds.
- Mitigate Interest Rate Risk: By focusing on floating-rate securities, CCLO helps reduce sensitivity to rising interest rates while aiming to deliver stable, monthly income.
- Strengthen Diversification: With low correlation to other fixed income segments, CCLO can enhance portfolio resilience, helping reduce volatility and improve overall risk-adjusted returns.
About CIBC Asset Management
CIBC Asset Management is the investment arm of the Canadian Imperial Bank of Commerce, one of Canada’s largest and most trusted financial institutions. With a dedicated credit research team and deep expertise in fixed income, CIBC brings rigorous oversight and industry-leading analysis to the management of CCLO. Their disciplined, research-intensive approach positions CCLO as a compelling fixed income solution in both growth and defensive market cycles.
Learn more about CCLO and CIBC Asset Management’s fixed income strategies at CIBC Asset Management.
Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.
