Beyond Corporate Bonds: Enhance Income With Private Credit

In the current higher-for-longer interest rate regime, more fixed income investors are seeking alternate paths to diversify their income sources. One option that may not have yet considered is private credit or more specifically, the Simplify Private Credit Strategy ETF (PCR).

PCR offers a compelling alternative or complement to traditional corporate bonds by providing institutional-grade private credit exposure within an ETF wrapper. Of course, there’s also its distribution rate of 11.48% (as of May 31, 2026), which will appease income seekers.

PCR offers institutional-grade exposure within a liquid ETF wrapper, sporting an 11.48% distribution rate for income-focused investors. The fund primarily invests in business development companies and closed-end funds that hold floating-rate senior secured loans, allowing its coupon payouts to adjust alongside benchmark rates like SOFR. By utilizing total return swaps to replicate the VettaFi Private Credit Index, PCR bypasses the heavy duration risk of corporate bonds while capturing a significant yield premium in high-interest rate environments.

Corporate bonds are highly sensitive to duration and interest rate volatility so they can be subjected to the actions of the U.S. Federal Reserve's monetary policy. Alternatively, the underlying holdings in PCR are primarily Business Development Companies (BDCs) and closed-end funds, which utilize floating-rate senior secured loans that can adapt to the Fed's interest rate policy. As a result of this BDC and closed-end fund exposure, these coupons reset alongside benchmarks like the Secured Overni...