(Bloomberg) -- Van Eck Associates Corp. has launched a private credit exchange-traded fund in Australia — the first of its kind in the market — to provide retail investors access to the fast-growing but typically illiquid asset class.
Listed on the Australian Securities Exchange at the start of this month, the ETF gives investors exposure to 25 US-listed private credit managers including Main Street Capital Corp., Blackstone Secured Lending Funding, Blue Owl Capital Corp. and FS KKR Capital Corp. against an index.
Private credit funds specialize in providing loans to private companies and charge a floating spread above the reference rate. By listing it on the exchange, investors are given access to a deeper and more liquid pool of borrowers and lenders.
“Investors have been going into unlisted vehicles, which can often have gating and lockups,” said Russel Chesler, head of investments and capital markets at Van Eck. “We saw demand from advisers for retail investors to be able to access private credit in a really liquid way by being able to trade an ETF on the ASX,” he said in an interview Monday.
The growth of private credit has exploded in the last five years as funds step in to fill the void left by banks which have retreated from leveraged lending. The market has currently over $1.7 trillion of assets under management, according to the latest estimates by data provider Preqin.
Investors will have exposure to around 3,900 different issuers and close to 6,000 mostly senior secured loans spread across a range of industries, according to Chesler. “One of the big advantage going into an index which has 25 of these underlying private credit companies is you’re getting really good diversification in terms of industries,” he said.
The firm has no plans to issue a comparable product in Asia as investors there tend to invest in ETFs listed in Europe and the US, Chesler added.
(Clarifies the almost 6,000 loans in sixth paragraph were mostly senior secured)
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