The rise of exchange-traded funds (ETFs) and their providers, like BetaShares, over the past decade or two has been nothing short of astronomical.
It wasn't that long ago that the only ETFs you could buy on the ASX were broad-based index funds. While these index funds remain popular, they have been complemented by a massive rise in funds exposed to niche corners of the market.
You can now get an ASX ETF that allows direct investment in Japanese stocks, Korean shares, or cybersecurity, agricultural, or defence companies. You can also buy funds that invest in property, gold, Bitcoin, or bonds. Much like the App Store, if you can think of something to invest in, chances are there's an ETF for that.
Despite a 44% rise in funds invested in ETFs on the ASX over the 12 months to 30 April to $259 billion, ETF provider BetaShares is reportedly not satisfied. It seems to have set its gaze on the next unexplored frontier of the ASX ETF sector – private credit.
Private credit refers to non-bank lending of capital to companies, usually small to medium-sized businesses. This arena has traditionally been unavailable to ordinary retail investors.
There are currently no ASX ETFs that offer direct access to private credit investments on our share market. In saying that, BetaShares' rival ETF provider, VanEck, does currently offer the VanEck Global Listed Private Credit ETF (ASX: LEND). This fund gives investors access not to private credit investments themselves, but a portfolio of companies that provide private credit facilities.
However, BetaShares has plans to shake that paradigm up.
BetaShares to launch private credit ETFs
According to reporting in the Australian Financial Review (AFR) this week, BetaShares plans to launch its private credit ETF in the near future. Speaking to the AFR, BetaShares chief executive Alex Vynokur said that the new fund will offer investors access to private credit markets in the United States as a starting point:
It's one of the most liquid markets, you know, globally. It's a very, it's a very well established market, and it's a market that Australian investors don't have a lot of access to.
Vynokur stated that BetaShares' eventual offerings would be "highly diversified and very cost-effective strategies" and would "offer a liquidity profile which is aligned with the profile of the underlying assets".
Let's see what the final products look like when BetaShares hits the launch button.
