Could we see private credit ETFs?
The possibility of a private credit ETF is looking unlikely for now, according to Macquarie Asset Management (MAM), but alternatives exist that can provide a similar return.
Speaking at the ASX Financial Adviser Day, Brett Lewthwaite, executive director at MAM, acknowledged the growth of private markets funds.
With interest rising among retail and wholesale investors, an ETF could be an option to improve their accessibility.
However, Lewthwaite thought it would be difficult to utilise these within an ETF due to the lack of daily valuations. Private markets are typically not priced mark-to-market, so pricing occurs less frequently than for publicly traded assets in order to minimise the effect of market volatility.
“A loan to a private company comes with much less liquidity so the possibility of having a private credit ETF seems quite remote to us. It would seem very difficult to offer day-to-day valuations on some of those investments.”
Meanwhile, Marc Jocum, investment strategist at Global X ETFs, added: “Bringing private credit into the ETF wrapper in Australia is a bold step forward in accessibility, providing access to an asset class that was once reserved for high-net-worth or wholesale investors, but it comes with significant challenges including regulatory hurdles, liquidity mismatches, and the difficulty of providing daily pricing for inherently illiquid assets.
“While innovation in the ETF space is welcome, it must be carefully balanced with investor protection and product integrity. ETFs may be taking over portfolios and growing in adoption, but not everything is necessarily suited to being listed.”
Lewthwaite suggested Macquarie’s Global Yield Maximiser Active ETF which invests in high yield and leveraged credit between BBB-B. Launched this February, this ETF invests in high yielding fixed income to outperform the Bloomberg AusBond Bank Bill Index.
“That should be a relatively similar type of return to private credit but with the daily liquidity and active management.”
Similarly, Jocum said Australian investors could get diversification via investment grade corporate bonds, Australian banking credit or high yield bonds which would offer them daily liquidity, clear pricing and transparency.
Jocum noted some firms in the US are already making early moves into the private market space within ETFs, however, there is hesitation among investors for now to access the vehicles.
“State Street partnered with Apollo to launch the SPDR SSGA IG Public & Private Credit ETF, which launched in February 2025, and has only seen net inflows on two trading days since launch, suggesting either investor scepticism, concerns around transparency, caution or a lack of trust in the structure.
“Demand for PRIV has been fairly muted so far, suggesting the ‘build it and they will come’ approach may not always apply.”
AUTHOR
Laura Dew
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