State Street Global Advisors identified CLO-based exchange-traded funds as a leading yield theme for 2026 in its Global ETF Outlook report [1, 2].

This projection signals a shift in how institutional and retail investors may approach fixed-income portfolios. As investors seek higher returns in a volatile market, the move toward active ETFs that incorporate complex loan structures could redistribute significant capital toward these specialized instruments [1, 2].

The firm described these strategies as a "Yield Frontier" [1, 2]. According to the report, active ETFs utilizing collateralized loan obligations, which pool together various loans, are gaining traction among investors [1, 2]. State Street expects these products to attract significant fixed-income flows as market participants prioritize higher yields [1, 2].

Specific products within this category are already demonstrating high returns. State Street’s High Income ETF currently pays a yield of over seven percent [3]. This performance underscores the potential for CLO-based strategies to outperform traditional fixed-income assets in the current economic environment [3].

The Global ETF Outlook provides a worldwide analysis of trends across the ETF landscape [1, 2]. By highlighting 2026 [1] as a pivotal year for these strategies, the firm suggests that the infrastructure for accessing these private-market-style returns via public ETFs has matured enough for broader adoption [1, 2].

State Street said that the growth of these ETFs is driven by the ability to provide liquidity to assets that were previously difficult for smaller investors to access [1, 2]. The firm said that the combination of active management and CLO structures allows for a more dynamic response to credit market shifts [1, 2].

“State Street highlighted CLO‑based exchange‑traded funds as a leading yield theme for 2026.”

The push toward CLO-based ETFs represents the 'democratization' of complex credit instruments. By wrapping collateralized loan obligations into an ETF structure, State Street is enabling a wider range of investors to access high-yield corporate debt that was traditionally reserved for hedge funds and large institutions. This trend indicates a broader appetite for risk in the fixed-income market as investors struggle to find yield in traditional government or high-grade corporate bonds.