VanEck will launch a global private credit exchange-traded fund (ETF) on the Australian Securities Exchange (ASX) next month, boosting it suite of local ETFs to 40.
The VanEck Global Listed Private Credit ETF, which will be known as LEND on the ASX, will list on 2 February and track the LPX Listed Private Credit AUD Hedged Index, which includes 25 global listed private credit companies.
VanEck Asia-Pacific chief executive Arian Neiron said the ETF will be the first of its kind listed on the ASX and is designed to allow Australian investors to take advantage of the global private credit market, estimated to be worth US$1.6 trillion last year.
“Growth in the private credit segment is an unparalleled global phenomenon. We’re seeing private credit increasingly taking over the core business of traditional banks, that is, the provision of debt capital to medium-sized companies and real estate. Australian investors will now be able to access this growing opportunity via an ETF on ASX,” Neiron said.
“We’re seeing immense interest in this investment strategy, which outstripped all other major asset classes in 2023 from an income perspective, with the LEND Index yielding over 10 per cent.
“With LEND, all types of investors get to reap the potential rewards from private credit, while also getting all the benefits that an ETF provides, including ease of access, transparency, liquidity and a diversified exposure.”
He added the ETF is likely to appeal to investors seeking to enhance their portfolio diversification and secure protection amid a series of successive interest rate hikes.
“This world of potentially higher rates for longer also bodes well for this asset class. As private credit is typically operating on a floating rate, it can offer interest rate protection should inflation persist or continue to be sticky,” he noted.
“Importantly, to date, Australian investors have taken manager, borrower and sector concentration bets when investing in private credit. A lot of private credit in Australia is targeted towards real estate, whereas the LEND Index has exposure to over 3950 loans diversified across 25 private credit managers all around the world.
“Furthermore, with LEND, investors in private credit now have a price discovery mechanism for an asset class that has been accused of ‘volatility laundering’.”