They are generally reserved for psychic powers and financial institutions.
However, Exchange-Traded Fund Industry aims to increase access to retail investors to alternative investments, including private credit.
Bondbloxx’s Joanna Gallegos considers it a great idea despite his reputation for charging high asset classes and academic research. Her company launched the Bondbloxx Private Credit Clo ETF (PCMM) about three months ago.
“We don’t believe in velvet ropes, we believe in market connections,” the company’s co-founder and chief operating officer told CNBC’s ETF Edge this week. “People don’t have access to it. It makes sense in the portfolio. People should be able to access such power tools in the portfolio.”
According to the Bondbloxx website, the fund invests approximately 80% of its holdings in private credit-backed loan obligations. Since its debut on December 3rd, Gallegos’ funds have grown by 1%.
The S&P 500 and Tech Heavy Nasdaq have just seen their worst performances each week since last September, but the Bondbloxx Private Credit Clo ETF has been virtually flat.
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Bondbloxx Private Credit Clo ETF Performance
Gallegos, former head of JP Morgan Asset Management’s global ETF strategy, believes the criticism surrounding alternative investment ETFs will decline.
“I heard the same pushback [on] High-Yield ETF: ‘Ah, the price can’t be. That’s too expensive,” she said. [and] We reduced the price of the category in terms of funds allocated. ”
“Most people don’t need that.”
But Todd Sohn of Strategas Securities argues that the so-called Velvet Rope is not worth experiencing. He said skeptical access to alternative investments provides meaningful benefits to retail investors.
“Most people don’t need that,” said the managing director of ETFs and technology strategies. “If you have a diverse portfolio of five low-cost ETFs, you’re pretty good, right?”
