VanEck releases private credit ETF on ASX

VanEck has announced the launch of its Global Listed Private Credit (AUD Hedged) exchange traded fund (ETF) (LEND) on the Australian Securities Exchange (ASX), broadening investor access to a normally restricted asset class.

According to the fund manager, the ETF will be Australia’s first global listed private credit ETF and will provide ASX investors the same opportunity as institutional and high-net-worth (HNW) investors without needing limited liquidity and price discovery.

Launching on Friday 2 February, LEND aims to provide a transparent, cost-effective investment option by tracking the LPX Listed Private Credit AUD Hedged Index (LEND Index), which features 25 global listed private credit companies.

“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,” Arian Neiron, VanEck CEO and Managing Director, Asia Pacific, 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%.

“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.”

In the last 15 years, the LEND Index’s income yield has averaged at approximately 8.6 per cent p.a.

“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,” Neiron said.

“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 3,950 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’.”

With the launch of LEND, VanEck will have 40 ETFs listed on the ASX.