Newark-based PGIM has launched a market-differentiated, AAA-rated, exchange-traded fund (ETF) for a collateralized loan obligation (CLO) designed to provide core-like duration exposure.
The PGIM AAA CLO Aggregate Duration ETF (AAAD) is alongside the PGIM Securitized Income ETF (PINC), which also employs a duration overlay.
With the fund, the firm said in a release that it’s introducing a strategy that leverages its CLO expertise to provide enhanced yield potential compared to traditional high-quality duration sectors.
It is listed on NYSE Arca, Inc. and offered at a 0.19% net expense ratio.
AAAD invests primarily in U.S. dollar-denominated AAA-rated CLOs either directly or through its investment in the PGIM AAA CLO ETF (PAAA). PAAA is the only Morningstar Medalist Gold-rated product in its Morningstar category and has been among the fastest-growing strategies in the market, accumulating over $10 billion in assets since its inception.
AAAD expects to use longer-duration fixed-income instruments and derivative instruments, such as futures, forwards, options, swaps, and U.S. Treasury futures, to maintain its target portfolio duration or extend its overall duration beyond that of its CLO exposure.
PINC invests primarily in securitized credit investments and other similar credit instruments, including derivative instruments that provide diversified exposure across the securitized credit landscape.
It is listed on the CBOE BZX Exchange and is offered at a 0.39% net expense ratio.
Both AAAD and PINC seek to maximize total return through a combination of current income and capital appreciation, leveraging the deep expertise of PGIM’s $1.2 trillion credit platform.
Last month, PGIM announced that its dedicated real estate fund has completed its 10th property acquisition, pushing the fund’s total deployed capital to $260 million.
