## [# Your Private Credit ETF Crash Course](/sections/advisor-center/your-private-credit-etf-crash-course)
# Your Private Credit ETF Crash Course
Private Credit ETFs are the new hot item, but are they right for you? Learn the CLO 'sweet spot' for access, how managers game liquidity rules, and what to avoid when investing.
[](/authors/conor-macwilliams)
[By Conor MacWilliams](/authors/conor-macwilliams)
Edited by: ETF.com Staff
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Private markets, in particular private credit, are one of the most discussed and debated topics right now in the ETF industry. Opinions vary widely on what should be considered private credit and if the ETF wrapper is even the correct vehicle for accessing whatever that currently nebulous term is.
The goal of this article is to give you a brief baseline of what private credit ETF offerings are out there are right now, how they differ from traditional funds, and how I think this segment will continue to develop. I’m an ETF consultant with a background in credit markets, equity indexing, and ETF product design. I’ve also been writing about private credit ETFs for the last few years out of personal interest and because no one else was writing about them from the perspective of a retail investor.
## So What Is Private Credit?
A simple answer would be that private credit is non-bank lending to private companies. That explanation doesn’t really tell the whole story though. This asset class is incredibly broad and defining it simply ignores the variety among instruments.
At a quick glance, you can segment private credit into: direct lending (or senior debt), mezzanine financing, distressed debt, special situations, venture debt, asset-based lending, specialty finance and infrastructure debt. This is NOT an exhaustive list but is representative of most of the market.
Most private credit is floating rate, unrated, and is almost never traded. For the vast majority of private credit, this is a feature not a bug. Investors (pensions, insurance companies, wealth funds, high and ultra-high net worth investors, and even retail) lock up their capital in a number of different vehicles, business development companies (BDCs), closed-end funds (CEFs), interval funds, and CLO’s, and other fund structures. This lockup and illiquidity allow the inbound cash to be a reliable funding source instead of potentially flying out the door during a downturn. More on this later.
I won’t go into detail on how deals are sourced and funded in this article; there is plenty of literature out there that can walk you through the process. Flow has a good general explainer on[ private credit as an asset class](https://flow.db.com/trust-and-agency-services/private-credit-a-rising-asset-class-explained), while Brookfield discusses[ sponsored versus non-sponsored financing](https://www.brookfieldoaktree.com/sites/default/files/2023-05/Understanding-Private-Credit-Sponsored-Vs-Non-Sponsored-Financing.pdf), and the Fed analyzed the state of[ bank lending to private credit ](https://www.federalreserve.gov/econres/notes/feds-notes/bank-lending-to-private-credit-size-characteristics-and-financial-stability-implications-20250523.html)earlier this year.
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## Breaking Down Private Credit ETFs Currently on the Market
Let’s take a look at the current crop of ETFs in this segment. I’ll divide them up by the type of private credit assets they have in their portfolios.
Note: While some of these products do not have private credit in their name, they do indeed have private credit exposure.
TickerNameLaunch Date[**BIZD**](/BIZD)Van Eck BDC Income ETFFebruary 11, 2013[**VPC**](/VPC)Virtus Private Credit StrategyFebruary 7, 2019[**HYIN**](https://www.etf.com/HYIN)WisdomTree Private Credit and Alternative Income FundMay 2, 2021[**PBDC**](/PBDC)Putnam BDC Income ETFSeptember 29, 2022[**PCMM**](/PCMM)BondBloxx Private Credit CLO ETFDecember 2, 2024[**PCLO**](/PCLO)Virtus Seix Private Credit CLO ETFDecember 2, 2024[**PRIV**](/PRIV)SPDR® SSGA IG Public & Private Credit ETFFebruary 26, 2025[**HBDC**](/HBDC)Hilton BDC Corporate Bond ETFJune 10, 2025[**PRSD**](/PRSD)State Street® Short Duration IG Public & Private Credit ETFSeptember 9, 2025[**PCR**](/PCR)Simplify VettaFi Private Credit Strategy ETFSeptember 23, 2025
### BDC/CEF Exposure:
These products offer private credit exposure via publicly traded business development companies (BDCs) and/or via public traded closed-end funds (CEFs).
CEFs are a very broad category. They are registered investment funds regulated under the Investment Company Act of 1940 that raise a fixed amount of money through an initial public offering (IPO) and then trade on an exchange like a stock. The CEFs we are focused on can be invested broadly and often own broadly syndicated loans, high-yield credit, and other diversified credits.
BDCs are CEFs that are further regulated under Section 54-65 of the Investment Act of 1940 that invest and lend only to small, developing, and/or troubled private companies. These companies are unable to source traditional lending so BDCs provide funding along with managerial help. Blue Owl has a [great explainer](https://www.blueowlcapitalcorporation.com/about-blue-owl-capital-corp/what-is-a-bdc) that goes into more depth on how these specialized funds are structured.
[**VanEck BDC Income ETF (BIZD)**](https://www.etf.com/BIZD) – Launched 2/11/2013
This is the granddaddy of the bunch. Launched 12+ years ago by VanEck to track a BDC index (the MVIS®US Business Development Companies Index), it currently has about $1.5 billion AUM1 and has averaged about 8% returns annually. I find it endlessly hilarious that folks have been complaining about the lack of private credit access for nearly a decade with this product sitting right there offering access for 42bp. Because of how acquired fund fees (AFFEs) and expenses are reported, the total operating expense looks far higher. In a perfect world, this would be enough exposure for the market. Sadly, it isn’t and it’s not.
[**Virtus Private Credit Strategy ETF (VPC)**](https://www.etf.com/VPC) – Launched 2/7/2019
The first product to carry the “Private Credit” in its moniker, this product from Virtus ETFs added CEFs to the mix along with BDCs for a more complete exposure. It tracks the Indxx Private Credit Index. A bit more expensive than BIZD at 75bps, the more diverse portfolio has performed well but suffers from COVID’s impact on the markets, skewing the annualized returns for its relatively short lifespan. Currently it sits at about $52mm AUM.
[**WisdomTree Private Credit and Alternative Income Fund (HYIN)**](https://www.etf.com/HYIN) – Launched 5/6/2021
HYIN was originally launched as WisdomTree Alternative Income Fund in 2021. They added the Private Credit moniker in July but the strategy has remained the same. The fund offers a diversified exposure to not only publicly-traded CEFs and BDCs but also throws REITs in the mix for a more balance portfolio. The expense ratio is 50bp net of AFFEs. HYIN is another example of retail having access to a fund with a thoughtful approach to alternative investment that includes private credit for half a decade but all we’ve heard about is how retail investors can’t have nice things! It currently has ~$55mm AUM.
[**Putnam BDC Income ETF (PBDC)**](https://www.etf.com/PBDC) – Launched 9/29/2022
The first actively managed private credit ETF, Putnam launched this 75bp product in 2022 and it’s performed very well since then. This is one of the cases where I can say active management has paid off pretty handsomely (so far!). Mike Petro is the PM for the fund so all credit to him for his strategy. PBDC is at $240mm AUM at the moment.
[**Hilton BDC Corporate Bond ETF (HBDC)**](https://www.etf.com/HBDC) – Launched 6/10/2025
No, not that Hilton! Hilton Capital Management is a relatively new player in the ETF world, having launched their first fund, an active equity SMID fund ([SMCO](https://www.etf.com/SMCO)) in 2023. They’re no strangers to 40 Act investment vehicles as they’ve run mutual funds since 2013. They launched this 39bp indexed BDC bond-focused product a few months ago. It’s tracking the Solactive Hilton Capital BDC Corporate Bond TR Index. We don’t have enough data to analyze the performance yet but BDC bond (as opposed to BDC equity exposure like BIZD) should be less volatile than their equity counterparts and look more like a short duration, fixed rate, investment-grade bond fund. This is a completely novel approach; no other ETFs have targeted BDC corporate debt in indexed or active formate yet. HBDC launched in June with $50mm AUM and has brought in another $30mm+ since then.
[**Simplify VettaFi Private Credit Strategy ETF (PCR)** ](https://www.etf.com/PCR)– Launched 9/23/2025
The newest player in the BDC/CEF approach to private credit exposure is PCR from Simplify ETFs. This actively managed product has a VERY unique attribute; a novel form of credit hedging pioneered in their [Simplify High Yield ETF (CDX)](https://www.etf.com/CDX). It uses long and short total return swaps on bespoke corporate credit indices (long quality, short junk) to get that positioning. CDX was the only product I know of to use something like this, and I’m happy to see them deploying it further. The fund tracks the VettaFi Private Credit Index via swap along with the credit hedge component. This product’s structure will get a separate breakdown and explanation in a later article because I find it fascinating. The expense ratio is 76bps and it has about $2.5mm AUM having just launched a month ago.
### CLO Exposure:
These products get private credit exposure by buying collateralized loan obligations (CLOs) from the originator or on the secondary market.
CLOs are packages of private credit loans, usually originated by middle-market direct lenders, that are sold in tranches that vary according their risk characteristics and credit protection. Some products focus solely on the highly rated (usually AAA) senior tranches that are the most liquid and protected while others will buy further down the risk ladder in the mezzanine (AA rated down to BB) tranches.
[**BondBloxx Private Credit CLO ETF (PCMM)** ](https://www.etf.com/PCMM)– Launched 12/2/2024
Our first entry for private credit exposure via CLO. When these products filed for approval, there were questions around whether these securitizations would end up being liquid enough to be considered Level 2 assets instead of Level 3 (and thus not subject to the 15% illiquidity cap we’ve seen other funds have to avoid). As it turns out, they are! Instead of buying a BDC or CEF, these funds purchase publicly rated and traded loan securitizations. In the case of PCMM, it buys a wide array of tranches from AAA through BB. The fund charges 68 bps and has $171mm AUM after launching with $25mm.
[**Virtus Seix AAA Private Credit CLO ETF (PCLO)** ](https://www.etf.com/PCLO)– Launched 12/2/2024
Virtus’s PCLO fund actually launched on the same day as PCMM. Taking a different approach to portfolio building, SEIX Investment Advisors, the subadvisors for PCLO, purchases only AAA tranches of private credit CLOs. This more conservative approach targets investors that have lower risk appetite but are still seeking uncorrelated credit returns. PCLO started with $10mm in AUM and has grown to ~$17.5mm since launch. They charge much less than PCMM, only 29bps.
### Core Plus (Now With Private Credit!)
[**SPDR® SSGA IG Public & Private Credit ETF (PRIV)** ](https://www.etf.com/PRIV)– Launched 2/26/2025
[PRIV](https://www.etf.com/PRIV) (and [PRSD](https://www.etf.com/PRSD) down below) is very different from the other funds in this list. Both funds use an approach that creates a standard broad market fixed income portfolio and adds private credit exposure to it. This results in a product that I would describe as having both the most direct exposure to private credit but also least complete portfolio exposure to it.
The composition of PRIV is roughly 92% public instruments (Treasuries, corporate IG credit, CLOs, and MBS for the most part) and 8% direct private credit. These direct assets are sourced by Apollo and are a black box for the most part. I’ve done[ extensive research and reporting on this product](https://outerbeachconor.substack.com/p/priv-and-priv-accessories-march-10th) and we still only have very basic information about the assets, their structure, and any covenants in place for the deals. The fund launched with $50mm in AUM and has grown to ~$152mm since then. PRIV’s expense ratio is 70bps with the vast bulk of that cost likely attributed to the sourcing and trading of the direct private credit sleeve.
[**State Street® Short Duration IG Public & Private Credit ETF (PRSD)** ](https://PRSD)– Launched 9/9/2025
This fund is exactly the same as PRIV but with a slightly lower expense ratio and a lower target duration (1-3 years). There’s no real difference in the private asset ownership with almost all of the direct loan exposure coming from the same assets. The fund costs 59bp and launched with $25mm AUM. Nothing much to say about this yet as it launched less than a month ago.
## What Really Separates Private Credit ETFs From More Conventional ETFs?
As you can see, private credit ETFs can vary pretty dramatically in portfolio construction and investment style. Some of these products, like PRIV and PRSD, have actual allocations to what I would consider “true” private credit. This would be a portion of a direct private loan in their portfolio. This is unlike the majority of the other products which get their private credit exposure from CLOs, BDCs, or CEFs. This one-step removal of custody and further securitization allows this asset to be considered a Level 2 asset.
In the case of PRIV/PRSD, I think they’re trying to mimic a Yale-style investment portfolio with higher allocations to alts and pitching the product as a complete credit package to investors. I don’t think this is necessarily the “best” way to get private credit exposure as you’re diluting most of the “juice” that private credit returns offer by having 80% or more of your holdings be “not private credit”.
The other products are much more “building block” ETFs. If you’d like to have a portion of your portfolio allocated to alts/privates, you can simply pick your risk tolerance and buy as much as you want. You aren’t forced into a predetermined profile.
These products all have operational differences. Sourcing and running trading operations for private credit, whether direct or via CLO/BDC, has distinct challenges and costs. The liquidity barriers haven’t been tested too hard for the CLO products nor the direct private credit products yet, but with credit conditions in flux we may see how they perform under stress.
Structurally, these funds fall into a bit of a weird spot. The BDC/CEF products have existed for over a decade now and have had minimal issues. The CLOs and the Yale-style products are still less than a year old. There is an inherent liquidity mismatch between publicly traded products like ETFs and opaque illiquid products like private credit.
CLOs bridge that gap by collateralizing the loans and having a reasonably robust secondary market of trading. PRIV and PRSD have structural issues in a number of ways but I think the largest is concentration control risk. Their entire private credit process hinges on Apollo being a valuation and liquidity provider as well as originating the vast majority of the direct private assets. This seems like a whole lot of eggs put in one basket and investors are supposed to trust SSIM/Apollo to get them the best execution without any way to verify it.
And there have been launch issues for some. PRIV notably received heavy pushback from the SEC after they failed to address staff letter concerns prior to launch. This resulted in a name change and SSIM agreed to limit their direct private credit exposure to less than 15%. They’d argue that if you include the private credit CLO exposure, they still crest the 25-30% target in their investment case but those are two very different assets, particularly when considering market liquidity.
## Has Lightning Struck?
I think these products provide a lot of different opportunity sets within private credit but there hasn’t been a stampede of flows to any of the newer launches. BIZD has a towering lead over the rest of the pack with $1.5B in AUM but even that is fairly small when compared to other corners of fixed income ETFs. If the TAM of the private credit ETF space is ~$2B, I don’t know that the current wave of private credit ETFs will be any kind of revolution across markets.
Is private credit suited for ETFs? Kind of.
I have pretty strong opinions on transparency. I think if you have an ETF, you should be required to report your holdings every day and that you should be able to prove the asset valuations you assign if pressed. So where does that leave me with this set of products? I think direct private loan access vis-à-vis PRIV/PRSD is the worst way to do it. First off, you can’t get more than 15% (or even close to 15% really) exposure and you cannot possibly expect me to just accept your private asset prices as canon with no way to assess or verify your marks.
I think CLOs are a great way to get exposure. They are a layer removed from the actual loan and a broadly diversified loan pool in a portfolio with other broadly diversified loan pools provides enough risk mitigation in my opinion. This might be the sweet spot.
BDC/CEF products are a tougher sell for me now that CLOs have appeared. They’re another layer removed (The BDC is the decision maker, the loan pool is purchased by them, the ETF purchases the BDC) and while it is a form of private credit exposure, I think it may be too many layers removed. I haven’t seen anything to suggest that BDC fund flows are shifting to CLOs but once the new products get a few years of returns perhaps investors will reevaluate.
Overall, “private credit” ETFs are still new. While BIZD has been around for a decade or so, they didn’t market themselves as a private credit ETF much and if you didn’t know how to analyze the fund documents, you’d never find out. Since the interest has grown in private credit, they’ve tripled their AUM in the last 3 years as they have been marketing their access to this asset class.
Other products have so far been lackluster. Some are generating enough fees to keep the lights on, but others have been stagnant. I think the next 18-to-24 months will be a make-or-break timeline for the growth of this sector. The regulatory environment is easing on all fronts so if issuers can get the SEC to change their standards on liquidity, we may see a surge in products and uptake from investors.
1\. All AUM data as of 10/27/25 per FactSet
[ Conor MacWilliams Owner of Outer Beach Consultants ](/authors/conor-macwilliams)
Conor MacWilliams is a seasoned product specialist and content creator with expertise in index construction, product development, and market… [View Bio](/authors/conor-macwilliams)
Related Topics [Advisor Center](http://www.etf.com/topics/advisor-center-0)
[VanEck](http://www.etf.com/topics/vaneck)
[Virtus](http://www.etf.com/topics/virtus)
[BondBloxx](http://www.etf.com/topics/bondbloxx)