Insight

People’s Pension: A strategic partnership for better member outcomes

10 November 2025
Invesco
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Collateralised Loan Obligations (CLOs)—especially AAA-rated tranches—are reshaping fixed income strategies for institutional investors across EMEA. Once considered niche, CLOs now offer diversification, floating-rate protection, and attractive yields, making them a practical fit for long-term portfolios. For a deeper dive into this topic, read the full paper: Enhancing Member Outcomes Through Smarter Fixed Income Portfolio Design.

People’s Pension and Invesco: A case study in innovation

A prime example of CLO integration is the partnership between People’s Pension and Invesco. Together, we’ve redefined fixed income design for Defined Contribution (DC) schemes—historically delivering higher income, lower volatility, and positive credit quality. This collaboration leverages Invesco’s CLO expertise and People’s Pension’s member-focused approach to achieve better retirement outcomes.

AAA CLOs stand out for:

  • Yield advantage over similarly rated corporate bonds.
  • Low duration for interest rate resilience.
  • Zero impairments historically across thousands of AAA tranches.

Access made simple

Through UCITS ETFs and fund-of-one structures, Invesco provides daily liquidity and transparent pricing, removing operational barriers. GBP-hedged share classes further enable UK DC investors to benefit from CLOs without complexity.

AAA CLOs delivered higher yields with minimal duration risk, compared to traditional corporate bonds.

Yield vs duration – June 2025

Source: Yield represented by Yield to Worst (YTW). US CLO AAA Notes represented by J.P. Morgan Euro CLOIE AAA Index, AAA US Corporates by Bloomberg U.S. Aaa Corporate Index, AAA US ABS by Bloomberg US Agg. ABS AAA Index, Bloomberg US Aggregate Bond Index by US Agg, 1-3 Yr Treasuries by U.S. Treasury: 1-3 Year Index and 1-3 year U.S. Corp by component of the US Agg index. Euro CLO AAA Notes represented by J.P. Morgan Euro CLOIE Index. Euro Agg 1-3yr by Euro-Aggregate: 1-3 Year Index. Euro Securitized AAA by Bloomberg Euro-Aggregate: Securitized – AAA Index. Euro Agg by Bloomberg Euro-Aggregate Index. Euro Corp IG by Bloomberg Euro-Aggregate: Corporate Index. Euro Corp AAA by Bloomberg Euro-Aggregate Corporate Aaa Index and Euro Agg Treasury 1-5 Yr by Euro-Aggregate: Treasury Index 1-5 Year. All Euro indices are hedged to Euro. An investment cannot be made directly in an index. Past performance does not predict future returns. All data as of 30 June 2025.

AAA CLOs show low correlation with other fixed income and equity markets, enhancing portfolio diversification.

US/Euro AAA CLO 5 Year Correlations – June 2025

Source: Correlation based on monthly total returns over the trailing 5 years ended 30 June 25. US CLO AAA Notes represented by J.P. Morgan Euro CLOIE AAA Index, AAA US Corporates by Bloomberg U.S. Aaa Corporate Index, AAA US ABS by Bloomberg US Agg. ABS AAA Index, Bloomberg US Aggregate Bond Index by US Agg, 1-3 Yr Treasuries by U.S. Treasury: 1-3 Year Index and 1-3 year U.S. Corp by component of the US Agg index. Euro CLO AAA Notes represented by J.P. Morgan Euro CLOIE Index. Euro Agg 1-3yr by Euro-Aggregate: 1-3 Year Index. Euro Securitized AAA by Bloomberg Euro-Aggregate: Securitized – AAA Index. Euro Agg by Bloomberg Euro-Aggregate Index. Euro Corp IG by Bloomberg Euro-Aggregate: Corporate Index. Euro Corp AAA by Bloomberg Euro-Aggregate Corporate Aaa Index and Euro Agg Treasury 1-5 Yr by Euro-Aggregate: Treasury Index 1-5 Year. All Euro indices are hedged to Euro. An investment cannot be made directly in an index. Past performance does not predict future returns. All data as of 30 June 2025.

Why it matters for EMEA investors

As European securitisation grows, CLOs present a timely opportunity to boost returns and manage risk. With strong ESG and integration and active oversight, Invesco ensures these strategies align with regulatory standards and member values.

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  • Investment risks

    For complete information on risks, refer to the legal documents.

    Value fluctuation: The value of investments, and any income from them, will fluctuate. This may partly be the result of changes in exchange rates. Investors may not get back the full amount invested.

    Credit risk: The creditworthiness of the debt the Fund is exposed to may weaken and result in fluctuations in the value of the Fund. There is no guarantee the issuers of debt will repay the interest and capital on the redemption date. The risk is higher when the Fund is exposed to high yield debt securities.

    Interest rates: Changes in interest rates will result in fluctuations in the value of the fund.

    Liquidity risk: It may be difficult for the Fund to buy or sell certain instruments in stressed market conditions. Consequently, the price obtained when selling such instruments may be lower than under normal market conditions.

    CLO Debt Securities Risk: Highly rated tranches of CLO Debt Securities may be downgraded, and in stressed market environments even highly rated tranches of CLO Debt Securities may experience losses due to defaults in the underlying loan collateral, the disappearance of the subordinated/equity tranches, market anticipation of defaults, as well as negative market sentiment with respect to CLO securities as an asset class.

    Many senior loans are illiquid, meaning that the investors may not be able to sell them quickly at a fair price and/or that the redemptions may be delayed due to illiquidity of the senior loans. The market for illiquid securities is more volatile than the market for liquid securities. The market for senior loans could be disrupted in the event of an economic downturn or a substantial increase or decrease in interest rates. Senior loans, like most other debt obligations, are subject to the risk of default. The market for senior loans remains less developed in Europe than in the U.S.

    Alternative investment products, including private equity, may involve a higher degree of risk, may engage in leveraging and other speculative investment practices that may increase the risk of investment loss, can be highly illiquid, may not be required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing important tax information, are not subject to the same regulatory requirements as mutual portfolios, often charge higher fees which may offset any trading profits, and in many cases the underlying investments are not transparent and are known only to the investment manager. There is often no secondary market for private equity interests, and none is expected to develop. There may be restrictions on transferring interests in such investments.

    Important Information

    This product is intended for professional investors only.

    All data provided by Invesco unless otherwise noted. All data as of 30 September 2025, unless otherwise noted.

    Views and opinions are based on current market conditions and are subject to change.

    This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.

    Information has been obtained from sources believed to be reliable, but J.P. Morgan does not warrant its completeness or accuracy. The Index is used with permission. The Index may not be copied, used, or distributed without J.P. Morgan’s prior written approval. Copyright 2025, JPMorgan Chase & Co. All rights reserved.

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    Issued by Invesco Asset Management Limited, Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxfordshire RG9 1HH, UK. Authorised and regulated by the Financial Conduct Authority. This fund is authorised overseas, not in the UK. The UK Financial Ombudsman Service is unlikely to be able to consider complaints about this fund, its management company, or its depositary. Any losses related to the management company or depositary are unlikely to be covered by the UK Financial Services Compensation Scheme.

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