Three months ago, BondBloxx launched the Private Credit CLO ETF (PCMM), aiming to connect the private credit market with investors. This innovative exchange-traded fund (ETF) allows participation in an area traditionally seen as exclusive. Since its debut on December 3, the fund has risen by 1%, offering investors a new avenue to access private credit while impacting price dynamics in this category.
Joanna Gallegos, co-founder and chief operating officer of BondBloxx, plays a pivotal role in this initiative. Formerly head of global ETF strategy at J.P. Morgan Asset Management, Gallegos believes in bridging gaps between markets. Her vision for the BondBloxx ETF is to democratize investment opportunities, making private credit accessible to a broader spectrum of investors.
"We don't believe in the velvet rope. We believe in connecting markets," – Joanna Gallegos
The ETF invests approximately 80% of its holdings in private credit collateralized loan obligations, a strategy that has stirred debate among financial professionals. Despite the skepticism, Gallegos remains optimistic that criticism surrounding alternative investment ETFs will diminish over time.
"We heard the same push back [on] high-yield ETFs: 'Oh, you can't price that. It's too expensive," – Joanna Gallegos
Strategas Securities' Todd Sohn expressed doubts about the purported exclusivity of such investment avenues, suggesting that the so-called velvet rope may not hold significant value. Meanwhile, the BondBloxx ETF's performance contrasts with the broader market downturn, as both the S&P 500 and Nasdaq experienced their worst weekly performances since last September.
The BondBloxx Private Credit CLO ETF closed virtually flat despite these market fluctuations, emphasizing its resilience and appeal to investors seeking stability and growth in uncertain times. By offering exposure to private credit, the ETF has contributed to driving down prices in this investment category, benefiting participants.
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