(Bloomberg) -- Palmer Square Capital Management is launching a pair of exchange-traded funds that will buy collateralized loan obligations and other assets, adding to a recent proliferation of such financing vehicles as investor access to securitized credit markets expands.
The ETFs will be the first by the credit-focused alternative asset manager, according to a statement by the firm seen by Bloomberg. In addition to investing in credit markets, Palmer Square is a frequent issuer of CLOs and is known for providing widely tracked indexes of CLO debt.
The Kansas City-based firm created the ETFs in response to demand from clients, in particular the wealth management community, founder Chris Long said in an interview.
"We have plenty of clients that aren't qualified investors and can't buy private funds," Long said. "For them the ETF wrapper is a convenient way to get exposure to these assets for which there is ample demand."
Until recently CLOs were available only to large and sophisticated investors, but over the last two years ETFs that track the sector have seen an influx of investor dollars. More than a dozen ETFs now focus on the space, including ones offered by Janus Henderson and Panagram.
One of the two ETFs Palmer Square is launching, called PSQA, will provide passive exposure to CLO debt rated AAA and AA by tracking Palmer Square's CLO Senior Debt Index.
A second ETF, called PSQO, will focus on relative value across corporate and structured credit, including CLOs, investment grade and high yield corporate bonds, ABS and bank loans.
(Corrects third paragraph to say Long is the founder)
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