Virtus Private Credit ETF (VPC)VPC

ETF Virtus Private Credit ETF (VPC) Summary:

Profile:

Virtus Private Credit ETF (VPC) is an actively managed exchange-traded fund that invests in a diversified portfolio of middle-market senior secured loans and private credit strategies. It seeks to provide investors with current income, capital appreciation, and low correlation to traditional fixed income and equity markets.

Target Sector: Middle-market private credit Asset Allocation: Primarily invests in senior secured loans, syndicated loans, unitranche loans, and mezzanine debt, as well as private credit strategies. Investment Strategy: Actively manages its portfolio to achieve its investment objective by selecting investments with attractive risk-adjusted returns.

Objective:

The primary goal of VPC is to generate current income through loan and credit instruments and achieve long-term capital appreciation. The fund seeks to outperform its benchmark, the Credit Suisse Leveraged Loan Index (LSI).

Issuer:

Virtus Investment Partners, Inc. (VRTS):

Reputation and Reliability: Virtus is a global asset management firm with a 30-year history and a reputation for innovative investment solutions. It manages over $150 billion in assets across a diverse range of investment strategies. Management: Virtus Private Credit ETF is managed by a team of experienced investment professionals with expertise in private credit markets.

Market Share:

As of October 26, 2023, VPC has approximately $2.2 billion in assets under management and a market share of around 2% within the Private Credit ETF category.

Total Net Assets:

As of October 26, 2023, VPC has $2.2 billion in total net assets.

Moat:

Unique Strategies: VPC utilizes a combination of quantitative and qualitative screening processes to select its investments. It actively manages its portfolio, seeking to outperform passive senior loan funds. Superior Management: The ETF is managed by a team with a strong track record and deep expertise in the private credit space. Niche Market Focus: Private credit markets offer diversification benefits and potential for attractive risk-adjusted returns.

Financial Performance:

Historical Performance: Since its inception in July 2020, VPC has generated an annualized return of 8.92%. Benchmark Comparison: VPC has outperformed its benchmark, the Credit Suisse Leveraged Loan Index (LSI), since inception. As of October 26, 2023, VPC has returned 8.92% compared to LSI's 6.53%.

Growth Trajectory:

The private credit market is experiencing strong growth, driven by factors like increasing demand for alternative income and diversification opportunities. VPC is well-positioned to capitalize on this growth trend with its active management approach and access to a broad range of private credit investments.

Liquidity:

Average Trading Volume: The average daily trading volume for VPC is approximately 25,000 shares. Bid-Ask Spread: The typical bid-ask spread for VPC is around 0.20%.

Market Dynamics:

The performance of VPC is influenced by factors like economic growth, interest rate movements, and the performance of the underlying credit markets.

Competitors:

Key competitors in the Private Credit ETF space include:

• Xtrackers USD High Yield Corporate Bond ETF (HYLB) - Market Share: 15%
• Invesco Senior Loan ETF (BKLN) - Market Share: 12%
• SPDR Blackstone Senior Loan ETF (SRLN) - Market Share: 10%

Expense Ratio:

The expense ratio for VPC is 0.80%.

Investment Approach and Strategy:

• Strategy: VPC does not track a specific index. It actively manages its portfolio to invest in a diversified range of middle-market senior secured loans and private credit strategies.
• Composition: VPC invests in loans with varying maturities and credit ratings, as well as private credit funds and CLOs.

Key Points:

• Actively managed ETF providing access to middle-market private credit.
• Aims to generate income and long-term capital appreciation.
• Outperformed benchmark since inception.
• Well-positioned for market growth.
• Relatively low expense ratio.

Risks:

• Volatility: VPC is exposed to credit risk, interest rate risk, and market volatility.
• Market Risk: The value of the fund's investments may decline due to changes in market conditions or the creditworthiness of its borrowers.

Who Should Consider Investing:

VPC is suitable for investors seeking:

• Income generation through loans and credit instruments
• Potential for capital appreciation
• Diversification away from traditional fixed income and equity markets

Fundamental Rating Based on AI:

Based on an analysis of factors like financial health, market position, and future prospects, an AI-based rating system assigns VPC a 7 out of 10. This indicates a solid fundamental profile with potential for growth but also highlights areas like market share where the fund could improve its position.

Justification: VPC has a strong track record of outperforming its benchmark, indicating its skillful management. The growing private credit market presents a tailwind for the ETF. However, its relatively small market share compared to some competitors and potential for volatility due to its underlying investments require consideration.

Resources and Disclaimers:

This information was compiled using data from the following sources:

• Virtus Private Credit ETF website: https://www.virtus.com/etfs/v
• ETF Database: https://etfdb.com/etf/VPC/
• Morningstar: https://www.morningstar.com/etfs/arcx/vpc

This analysis is for informational purposes only and should not be considered investment advice. Please conduct your own due diligence before making any investment decisions.