State Street and Blackstone Launch European CLO ETF Partnership

State Street and Blackstone are partnering to launch a collateralized loan obligation (CLO) ETF in Europe. The State Street Blackstone Euro AAA CLO UCITS ETF will be domiciled in Ireland and is set to launch later this year. CLO ETFs have emerged as a fast-growing corner of Europe's ETF market, with several firms entering the space and intensifying competition. The partnership marks State Street's third foray into third-party partnerships for fixed income ETFs in the US and Europe.

State Street Investment Management and New York-based alternatives manager Blackstone are set to launch a collateralized loan obligation (CLO) ETF in Europe. The State Street Blackstone Euro AAA CLO UCITS ETF is scheduled to debut later this year and will be domiciled in Ireland [1].

The partnership marks State Street's third foray into third-party fixed income ETFs in the US and Europe. State Street already collaborates with Blackstone on two fixed income ETFs in the US, one of which includes CLOs [1]. This new venture underscores the growing opportunity in the fixed income ETF market, particularly in Europe.

CLO ETFs have gained traction in Europe, with several firms entering the space. The Fair Oaks AAA CLO UCITS ETF (FAAA) was the first to launch nearly a year ago, and since then, firms like Janus Henderson, BlackRock, Invesco, UBS Asset Management, Eldridge, and Palmer Square Capital have followed suit [1]. The competition has intensified, with BlackRock's fee war leading Invesco and Janus Henderson to match the 0.25% fee for their respective CLO ETFs [1].

The State Street Blackstone Euro AAA CLO UCITS ETF will offer investors exposure to AAA-rated European CLOs, which are structured in tranches from highest (AAA) to lowest (equity) with loan repayments flowing from the top down. This structure has drawn scrutiny for packaging private equity loans into liquid vehicles, but a source familiar with the structure has noted that AAA European CLOs are more liquid than European high yield bonds [1].

Blackstone's involvement in the CLO market is not new. The firm launched an investment trust containing European and US CLOs in 2014 but has since announced plans to wind down the trust in 2023 due to a persistent widening of its discount to net asset value [1]. This new ETF represents a different approach for Blackstone to engage in the CLO market.

State Street's push into the active ETF market in Europe is also notable. The firm is planning to launch in-house strategies and partner with third-party active managers to co-develop products. This strategy complements State Street's existing products and aligns with the growing demand for active ETFs in Europe [3].

The launch of the State Street Blackstone Euro AAA CLO UCITS ETF is part of a broader trend in the ETF market. Global ETF flows reached a record $900 billion in the first half of 2025, a 25% increase year-over-year, driven by investor appetite for sustainable and thematic ETFs, as well as continued demand for fixed income and equity products [2]. This growth underscores the potential for the CLO ETF market to continue to thrive.

References:
[1] https://www.etfstream.com/articles/state-street-and-blackstone-partner-on-clo-etf-in-europe
[2] https://www.ainvest.com/news/global-etf-flows-surge-25-yoy-900b-h1-2025-state-street-2508/
[3] https://www.etfstream.com/articles/etf-wrap-state-street-to-enter-active-etfs