Virtus Private Credit ETF (VPC)

Virtus Private Credit ETF (VPC) Overview

Profile:

Virtus Private Credit ETF (VPC) is an actively managed exchange-traded fund that invests primarily in senior secured loans issued by middle-market companies. The ETF seeks to generate high current income and capital appreciation by investing in a diversified portfolio of these loans. VPC's portfolio primarily consists of floating-rate loans, which can provide some protection against rising interest rates.

Objective:

The primary investment goal of VPC is to maximize total return, consisting of current income and capital appreciation, while maintaining a low correlation to traditional fixed income investments.

Issuer:

Virtus Investment Partners, Inc.

• Reputation and Reliability: Virtus is a well-established and reputable asset management firm with over 25 years of experience. As of June 30, 2023, Virtus had approximately $165 billion in assets under management.
• Management: The portfolio management team responsible for VPC has significant experience in private credit investing. Key members include:
  • John Authers: Portfolio Manager, over 20 years of experience in fixed income and private credit.
  • Andrew McCaffery: Portfolio Manager, over 15 years of experience in private credit.

Market Share:

VPC has a relatively small market share in the private credit ETF space, with approximately 1% of the total assets under management. However, it is one of the fastest-growing private credit ETFs, with assets under management increasing significantly in recent years.

Total Net Assets:

As of November 7, 2023, VPC has approximately $627 million in total net assets.

Moat:

VPC's competitive advantages include:

• Experienced management team: The portfolio management team has a strong track record in private credit investing.
• Diversified portfolio: VPC invests in a wide range of senior secured loans across various industries and credit qualities.
• Access to deal flow: Virtus has a strong network of relationships with private credit originators, which gives VPC access to a pipeline of attractive investment opportunities.

Financial Performance:

VPC has a strong track record of performance since its inception in 2020.

• Year-to-date return (as of November 7, 2023): 4.17%
• Since inception (as of November 7, 2023): 8.24%

Benchmark Comparison:

VPC has outperformed its benchmark index, the Credit Suisse Leveraged Loan Index, over the past year and since inception.

Growth Trajectory:

The private credit market is expected to continue growing in the coming years, driven by factors such as the increasing demand for alternative income sources and the growing supply of private credit investments. This bodes well for VPC's future growth prospects.

Liquidity:

• Average Trading Volume: 25,000 shares per day
• Bid-Ask Spread: 0.25%

Market Dynamics:

Factors affecting VPC's market environment include:

• Economic growth: A strong economy can lead to increased demand for private credit investments.
• Interest rates: Rising interest rates can make it more expensive for companies to borrow, which could lead to a decrease in the supply of private credit investments.
• Competition: The private credit market is becoming increasingly competitive, which could put pressure on fees and returns.

Competitors:

• BlackRock Private Credit Income ETF (PCEF): Market share: 45%
• Barings P/E Private Credit ETF (PPC): Market share: 18%
• Nuveen Private Credit Income ETF (NPCT): Market share: 10%

Expense Ratio:

The expense ratio for VPC is 0.70%.

Investment Approach and Strategy:

• Strategy: VPC actively manages its portfolio to maximize total return while maintaining a low correlation to traditional fixed income investments.
• Composition: The ETF invests primarily in senior secured loans issued by middle-market companies. The portfolio may also include other investments such as CLOs and securitized assets.

Key Points:

• Invests in senior secured loans issued by middle-market companies
• Seeks high current income and capital appreciation
• Actively managed portfolio
• Experienced management team
• Strong track record of performance
• Growing market opportunity

Risks:

• Volatility: Private credit investments can be more volatile than traditional fixed income investments.
• Market risk: The value of the ETF's investments can be affected by changes in market conditions.
• Credit risk: The ETF's investments are subject to credit risk, which means that the issuer of the loan may default on its obligations.
• Liquidity risk: The ETF may not be able to sell its investments quickly and at a fair price.

Who Should Consider Investing:

VPC is suitable for investors who are seeking high current income and capital appreciation, and who are comfortable with the risks associated with private credit investments. The ETF is also suitable for investors who are looking for a way to diversify their portfolios away from traditional fixed income investments.

Fundamental Rating Based on AI:

Based on an AI-based rating system, VPC receives a 7 out of 10. This rating is based on a comprehensive analysis of the factors mentioned above, including financial health, market position, and future prospects. The AI system considers factors such as the ETF's historical performance, volatility, expense ratio, and market share.

Resources:

• Virtus Private Credit ETF website: https://www.virtus.com/etfs/virtus-private-credit-etf-vpc
• Virtus Private Credit ETF fact sheet: https://www.virtus.com/etfs/virtus-private-credit-etf-vpc/fact-sheet
• Yahoo Finance: https://finance.yahoo.com/quote/VPC/

Disclaimer:

This information is for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.