From Yahoo Finance: 2025-06-27 16:15:00

Investors are drawn to private assets for higher returns, but skepticism arises when these assets are put into daily, liquid ETFs due to concerns about transparency. The debate continues as new ETFs holding collateralized loan obligations (CLOs) and direct loans are launched.

Dave Nadig, an ETF expert, emphasizes the importance of trust in managers of private-credit-type ETFs. He spoke at the Morningstar Investment Conference in Chicago, highlighting the significant trust bet investors are making in these vehicles.

Joanna Gallegos, COO of BondBloxx, notes increasing demand for private assets as public markets become more correlated. CLOs are seen as natural fits in ETF innovation, providing investors with access to income-producing private assets with clear risk characteristics.

Nadig agrees with assessing the risk in CLOs but expresses concern about funds like PRIV, sourced by Apollo Global Management for State Street. He questions whether investors truly understand the quality of assets they are buying, highlighting potential risks in these types of investments.

Both Nadig and Gallegos acknowledge the importance of structuring private assets in ETFs and helping investors understand how these funds fit into a portfolio. Gallegos sees ETFs as an evolving process, similar to initial concerns with emerging market ETFs in the early 2000s.



Read more at Yahoo Finance: The Debate Over Private Assets in ETFs Heats Up