This is a partnership designed to increase access to private credit, a rapidly expanding asset class for retail investors.
Simplify Asset Management and Vettafi launched their proactively managed Simplify Vettafi Private Credit Strategy ETF (PCR) on Wednesday.
“The role of private credit in a portfolio is only available to historically highly-heavy net and institutional investors,” managing director Paisley Nardini told CNBC’s ETF Edge this week.
According to Nardini, the new ETF strategy is unique. Because it doesn’t become traditional private credit, including lockups and high fees.
“This is an efficient liquid vehicle that provides indirect exposure to BDCs. [business development companies] Or, closed-end funds investing in these companies “have access to direct liquid play with personal credits via ETFs like PCR,” she said.
Nardini points to the private credit boom as a catalyst for his decision to team up with Betafi. She argues that asset class ability to provide income flows can also be a valuable tool for retail investors.
“One of the main benefits and reasons we saw this rush is that it can lower low double-digit types of revenue and distribution yields,” Nardini added.
Simplify Vettafi Private Credit Strategy ETF is based on an index developed by Vettafi.
“There’s a quality and liquidity screen that’s part of this process. So we’re continuing to call space and make sure it’s appropriate and make sure it’s accessible to investors,” Todd Rosenbruce, the company’s research director, said in the same interview.
And he expects the new offering will attract investors’ attention.
Private Credit vs Bitcoin
“We recently conducted an advisory survey in Bettafi about how they were trying to diversify their portfolios. What was convincing for me was that more people chose private credit than digital assets,” Rosenbluth said. “So, in contrast to Bitcoin, there have been more and more people interested in touching ETF rappers through something very difficult to find for now.”
He sees private credit as a portfolio diversifying device, suggesting an allocation of 5% to 10%.
As of the end of Friday, the Simplify Vettafi Private Credit Strategy ETF has been virtually flat since its debut on Wednesday.
