Alternative investments, typically reserved for the ultra-rich and financial organizations, are now being made more accessible to retail investors thanks to the exchange-traded fund (ETF) industry. Companies such as BondBloxx are pioneering this movement, despite the asset class being known for its high fees and slow returns.

Three months ago, BondBloxx launched the Private Credit CLO ETF (PCMM) which invests about 80% of its assets in private credit collateralized loan obligations. Joanna Gallegos, the co-founder and chief operating officer of BondBloxx, believes this is a power tool that every investor should have access to in their portfolio.

Since its launch in early December, the BondBloxx Private Credit CLO ETF has seen a 1% increase. In comparison to the S&P 500 and Nasdaq, which recently experienced their worst weekly performances since September of last year, the BondBloxx ETF has remained stable.

Gallegos, who previously led the global ETF strategy at J.P. Morgan Asset Management, believes that the criticisms surrounding alternative investment ETFs will eventually disappear. She draws parallels to the initial criticisms of high-yield ETFs, which eventually gained acceptance and drove down prices in the category.

However, not everyone agrees with this approach. Todd Sohn, the managing director of ETF and technical strategy at Strategas Securities, argues that the benefits of alternative investments for retail investors may not be significant enough to warrant the effort. He suggests that a diversified portfolio of low-cost ETFs would suffice for most investors.

This development in the ETF industry is a fascinating topic for those interested in investing, providing a new perspective on alternative investments and how they can potentially be used in an investment portfolio.