Palmer Square Capital Management, a leading U.S.-based alternative asset manager known for its credit-focused strategies, is making significant strides in expanding its global footprint. The firm, which currently manages over $33 billion in assets, is set to debut a series of exchange-traded funds (ETFs) tailored for European institutional investors. This strategic move aims to capitalize on the growing demand for structured credit solutions in the European market and positions Palmer Square as a key player in the global investment landscape.
Palmer Square Capital Management: A Leader in Credit-Focused Strategies
Palmer Square Capital Management has built a strong reputation as a credit-focused alternative asset manager, primarily serving institutional investors. The firm’s expertise lies in managing complex credit portfolios, with a particular emphasis on structured credit, including collateralized loan obligations (CLOs). With a proven track record of innovation and performance, Palmer Square has successfully managed a variety of investment products, including its flagship NYSE-listed ETF, the Palmer Square Senior Loan Fund (PSQO), which has garnered attention from investors seeking exposure to structured credit.
As part of its ongoing expansion efforts, Palmer Square is now eyeing the European market, a region where institutional demand for structured credit solutions has been steadily increasing. In early 2025, Palmer Square plans to introduce three new CLO-focused ETFs aimed at European institutional investors, marking a significant milestone in the firm’s global growth strategy.
The European ETFs: A Strategic Move to Meet Rising Demand
The upcoming Palmer Square ETFs will cater specifically to the needs of European investors, focusing on providing access to CLO debt. The first fund to be launched will be the Palmer Square EUR CLO Senior Debt Index ETF, which will focus on EUR and USD-denominated AAA and AA CLO debt. This fund aims to offer European investors efficient access to high-quality structured credit with minimal default risk. The launch of this ETF underscores Palmer Square’s commitment to providing cutting-edge investment solutions to meet the evolving demands of global institutional clients.
Angie Long, Chief Investment Officer and Portfolio Manager at Palmer Square Capital, emphasized the significance of this launch, stating, “The launch of these ETFs in Europe underscores our commitment to delivering cutting-edge solutions in complex investment environments across the globe. It is a natural extension of our global expertise in structured credit and demonstrates our ability to meet the rising market demand. Leveraging our proprietary benchmarks trusted by institutions worldwide, these new products offer efficient access to a unique and compelling asset class, affirming our commitment to creating value for institutional and professional investors.”
In addition to the Palmer Square EUR CLO Senior Debt Index ETF, the firm will debut two other ETFs, including an actively managed, multi-strategy ETF and passive products based on the firm’s proprietary benchmarks. These products will cater to different investment needs, offering European investors a comprehensive suite of CLO-focused investment solutions.
The Actively Managed Multi-Strategy ETF
One of the key highlights of Palmer Square’s upcoming European ETF lineup is an actively managed, multi-strategy ETF. This fund will provide exposure to a diverse set of credit assets, including corporate and structured credit. It aims to offer institutional investors a more flexible approach to portfolio construction while also capitalizing on relative value opportunities across multiple asset classes.
The actively managed ETF will focus on dynamic credit allocation, allowing the portfolio managers to respond to changing market conditions and optimize returns for investors. This strategy is designed to appeal to institutions seeking a higher degree of active management and the potential for alpha generation in a complex and evolving credit environment.
Taylor Moore, Managing Director and Portfolio Manager at Palmer Square, commented on the significance of the actively managed ETF, saying, “Institutional appetite for our proprietary European CLO indices and debt products further underscores the demand for these innovative ETFs. Our ability to manage and develop these products entirely in-house ensures operational independence and best-in-class execution.”
The Passive ETFs: Focused on Senior CLO Tranches
In addition to the actively managed multi-strategy ETF, Palmer Square will also offer passive ETFs that provide exposure to senior CLO tranches. These passive products will benefit from the firm’s extensive experience and expertise in CLOs, which have historically demonstrated strong performance and minimal defaults, particularly in the senior tranches. By focusing on senior CLO debt, Palmer Square’s passive ETFs offer European investors an attractive option for gaining exposure to structured credit with a focus on risk mitigation.
Senior CLO tranches are typically considered lower-risk investments within the CLO structure due to their priority in the capital stack. As a result, they tend to be less sensitive to credit defaults, making them a desirable investment choice for risk-conscious institutional investors. Palmer Square’s passive ETFs will provide efficient access to this high-quality, low-risk portion of the CLO market.
Expanding Global Reach: Palmer Square’s Strategy for Growth
Palmer Square’s decision to expand into Europe with a suite of CLO-focused ETFs is a strategic move to further diversify its global presence and meet the rising demand for structured credit products. Europe has long been a key market for institutional investors seeking innovative and efficient credit solutions, and Palmer Square’s expertise in managing CLOs positions it to capitalize on this growing market.
The launch of these ETFs will also strengthen Palmer Square’s reputation as a global leader in credit-focused alternative investments. The firm’s ability to develop and manage these products entirely in-house ensures that it can maintain operational independence and deliver best-in-class execution for its clients. As institutional investors in Europe increasingly seek exposure to CLOs, Palmer Square’s new ETFs will provide a compelling option for those looking to enhance their portfolios with structured credit.
Looking Ahead: A Bright Future for Palmer Square’s European ETFs
As the European market for structured credit continues to grow, Palmer Square’s new CLO-focused ETFs are expected to play a crucial role in meeting the needs of institutional investors. The firm’s commitment to innovation, combined with its deep expertise in managing structured credit products, positions Palmer Square to succeed in the competitive European ETF market.
The launch of the Palmer Square EUR CLO Senior Debt Index ETF, along with the multi-strategy and passive ETFs, is set to bring new opportunities for European investors looking to diversify their portfolios with high-quality, low-risk structured credit investments. With the European launch expected in early 2025, Palmer Square is poised to make a significant impact on the global structured credit landscape.
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This article provides a comprehensive overview of Palmer Square Capital Management’s upcoming launch of CLO-focused ETFs in Europe and highlights the firm’s strategy for expanding its global presence in the structured credit market.