Fast Starts For These New Virtus ETFs

Last month, to little fanfare, Virtus Investment Partners launched two exchange traded funds. Both ETFs debuted Feb. 7 and are already proving to be among the most successful new ETFs of the past year.

The VPC

The Virtus Private Credit Strategy ETF VPC is one of the two ETFs recently launched by Virtus. VPC follows the Indxx Private Credit Index. That index “provides passive exposure to listed instruments that emphasize private credit, including business development companies (BDCs) and closed-end funds (CEFs),” according to the issuer.

By holding assets such as BDCs and CEFs, VPC is positioned as a high-yield income fund. VPC holdings have consistently paid dividends over the past three years and must have minimum market values of $100 million. The new ETF weights its holdings based on three-year dividend yield.

“As commercial banks have moved away from financing small-to-mid-sized U.S. companies, private lenders have become a burgeoning capital solution, offering exposure to generally below-investment grade or unrated private debt, which carries higher yields and more volatility than traditional corporate bonds,” according to Virtus.

While VPC has an expense ratio of 7.64 percent, according to issuer data, which is high for any type of fund, active or passive, the new ETF had $160.75 million in assets under management as of March 1.

And The VRAI

The other new Virtus ETF that's gathering assets at an impressive pace is the Virtus Real Asset Income ETF VRAI.

That new ETF follows the Indxx Real Asset Income Index. That benchmark “comprises income-producing, U.S. equity securities across three real asset categories: real estate, natural resources, and infrastructure,” according to Virtus.

VRAI components must show consistent dividend growth over the past three years to be included in the new ETF. The fund includes 30 holdings from the infrastructure, natural resources and real estate segments for a total of 90 holdings.

VRAI is more reasonably priced than VPC as the former has an annual fee of 0.55 percent, or $55 on a $10,000 investment. The new ETF had $183.22 million in assets under management as of March 1, according to issuer data.

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