BondBloxx ETFs is placing a significant emphasis on private credit, despite some forecasts on Wall Street predicting potential troubles in this sector. However, Joanna Gallegos, the firm's co-founder and chief operating officer, remains confident that private credit is a prudent avenue for investors seeking income.
In a recent interview with CNBC's 'ETF Edge,' Gallegos addressed concerns stemming from reports of certain funds facing markdowns. She attributed these issues to specific managers' concentrated approaches or the types of loans and companies involved in their funds.
Gallegos, who previously served as the head of global ETF strategy at J.P. Morgan Asset Management, explained that BondBloxx's strategy mitigates these risks through extensive diversification. "Our BondBloxx Private Credit CLO ETF (PCMM) is structured to provide exposure to over 7,000 loans," she noted. "This offers a direct play into private credit, with 80% of the exposure in this product dedicated to private credit. Unlike some other vehicles and ETFs, this ensures a significant portion remains within private credit."
BondBloxx introduced its Private Credit CLO ETF in December 2024, labeling it as the pioneering ETF to deliver direct private credit exposure to investors. According to FactSet, the fund has experienced a 7% increase since launch and a 2% rise in the last three months, based on Wednesday's market close.