Private-credit exchange-traded funds (ETFs) have recently entered the market, marking Wall Street’s latest attempt to bring private assets to the masses. At least three major players – StateStreet, BondBloxx, and Virtus – have launched funds focused on tapping into private credit.
These ETFs aim to provide a new way for investors to access private credit investments. Private credit involves lending money to companies or individuals that are not typically included in mainstream investment portfolios, often carrying higher risks. By investing in these ETFs, retirement account holders may be able to diversify their portfolios and potentially earn better returns.
However, critics argue that the increased accessibility of private credit comes with higher risks, making it essential for investors to carefully evaluate their own risk tolerance before investing in these funds. As private-credit ETFs continue to gain traction, it’s crucial to understand what’s really inside these “black boxes” and how they can fit into a broader investment strategy.
For now, private-credit ETFs are not yet available as part of 401(k) plans, but their emergence suggests that the financial industry is working towards bringing alternative assets like private credit to a wider audience – including retirement accounts.
Source: https://www.marketwatch.com/story/private-credit-etfs-are-here-why-your-retirement-account-may-be-their-next-target-71a282be