Can ETFs and indices unlock securitized market opportunities for investors?

Bloomberg Professional Services

How are ETFs and indices changing investor access to securitized markets like Collateralized Loan Obligations (CLOs) and Asset-Backed Securities (ABS)? What innovations are bridging the gap between market structure and investor strategy? 

At Bloomberg’s 2025 Pricing & Valuations Summit in New York, Nick Gendron, Global Head of Fixed Income Index Product at Bloomberg spoke with Erica Adelberg, Chief Mortgage-Backed Securities Strategist at Bloomberg Intelligence, Joyce Choi, Head of Institutional Product Strategy and Fixed Income ETFs at BlackRock, and Joanna Gallegos, Co-Founder, BondBloxx about the factors reshaping access, transparency, and strategy in securitized investing. 

In focus 

Featured insights from the discussion panel: 

On structural shifts in mortgage demand and ETF flows 

Erica Adelberg: One of the reasons mortgage spreads have widened to compensate is because the marginal investor has been, for the past couple of years, mutual fund–type accounts as opposed to traditionally banks. Since the global financial crisis, the Federal Reserve has served as a backstop bid—we haven’t had that. We’ve had decent support from overseas investors, but even that’s a little bit at risk right now with the tariffs... A big shift… is that a lot more of the fund inflows are actually going into ETFs, which in a lot of cases are indexed.*

On CLO growth and floating-rate exposure

Joyce Choi: The CLO market is about $1.3 trillion in size and has grown by about 50% over the past 10 years. From an asset class that was very, very niche, right around the Global Financial Crisis and the early 2010s, it’s grown into quite a viable, investable market. ETFs are formed where demand is needed, and so there was a [demand] given where we were in the markets in 2020. That was when the first AAA CLO ETF was launched. We were in a zero-interest rate environment, it was super difficult to try to find yield.

On ETFs unlocking access to complex markets 

Joanna Gallegos: ETF in itself is a securitization process. Whether you put emerging market equity securities in it, you put gold bars in it, you put mortgages in it. The CLO is a securitization, and so are the MBS [Mortgage-Backed Securities] and CMBS [Commercial Mortgage-Backed Securities]. When an ETF holds it, it just immediately provides access to a market that’s underneath.

*Quotations have been edited for brevity and clarity.

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