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BondBoxx, which manages $3.3 billion in 24 ETFs, is aiming to launch an exchange-traded fund focused on private credit, joining a handful of other firms that have announced plans in recent weeks to offer retail investors exposure to private equity.
The proposed BondBloxx Private Credit CLO ETF would invest mainly in privately issued loans packaged into securities called collateralized loan obligations (CLOs), according to a Sept. 12 filing with the Securities and Exchange Commission.
The move comes just days after State Street and Apollo Global Management announced similar plans, highlighting the rising interest in making private credit accessible through ETFs.
Read More: State Street, Apollo Propose Private Credit ETF
Private Equity’s Boom
While private credit has boomed in recent years, it’s largely been limited to institutional investors. Apollo Global values the private credit market at $40 trillion.
The proposed fund from Larkspur, California-based Bondbloxx would invest at least 80% of its assets in CLOs backed by loans to private companies, according to the filing.
BondBloxx defines private companies as those “of any size that are privately-owned and do not issue equity securities in the public markets,” the prospectus notes.
Delaware Investment Fund Advisers, part of Macquarie Group, would manage the fund’s investment, the filing says.
The fund may invest up to 35% of its assets in lower-rated, higher-risk securities, commonly known as “junk bonds,” according to the filing.
BondBloxx acknowledges in the filing that private credit investments can be hard to sell quickly, which could pose challenges for an ETF that trades daily.
“CLOs are generally considered to be long-term investments and there is no guarantee that an active secondary market will exist,” the filing states.
The proposal does not yet include a ticker symbol or fee for the fund.
BondBloxx was founded in 2021 by Joanna Gallegos and Leland Clemons. The firm’s largest fund is the $967.5 million BondBloxx Bloomberg Six Month Target Duration US Treasury ETF (XHLF).
Private credit deals have accounted for about $25 billion of the $130 billion in new CLO issuance this year, according to Bloomberg data.
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