The PCMM Advantage: Your Gateway to Private Credit Income 💰

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Today, we're highlighting a new player in the fixed-income space: the BondBloxx Private Credit CLO ETF (PCMM). This actively managed ETF allows retail investors to access the historically institutional-only private credit market. For those seeking income while prioritising capital preservation, PCMM offers an appealing entry into an asset class traditionally dominated by endowments and pension funds.

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What is PCMM?

We previously introduced the PCMM in our private credit quicklist article. Launched by BondBloxx on December 2, 2024, this actively managed exchange-traded fund focuses on capital preservation and current income, targeting investors who seek yield without excessive risk.

Typically, PCMM invests at least 80% of its net assets in private-credit collateralised loan obligations (CLOs). CLOs are a type of securitisation that pools payments from multiple middle-sized and large business loans into tradable securities. These structures group diverse securities into risk tranches, each representing different levels of risk and return, and can be sold to investors. By investing in a CLO tranche, investors gain exposure to a diversified pool of loans rather than a single corporate loan or bond.

Private credit strategies, particularly middle-market lending via CLOs, typically offer higher interest payments than comparable corporate bonds or leveraged loans. There are a few reasons for this:

• 🛡️Resilience in Rising Rates: The underlying loans are typically floating-rate, meaning their interest payments adjust with benchmark rates, providing a built-in hedge against inflation.

• 💰Attractive Yield Premium: By focusing on middle-market companies, these loans often command higher credit spreads than those for large corporations, leading to greater potential returns.

• 🧩Built-in Diversification: Each CLO holds a portfolio of dozens or even hundreds of individual loans, which structurally mitigates the risk from any single borrower's default.

By investing in PCMM, retail investors can access potential benefits, including higher yields and diversification, without needing to source or underwrite private loans individually.

The U.S. private credit market has grown substantially, now accounting for about 21% of the leveraged finance market, compared to 40% for high-yield bonds—a shift that highlights its growing importance in the credit ecosystem.

Investment Strategy📊

Given its structure and objectives, PCMM can play multiple roles in a diversified ETF portfolio. Here’s how you might think about it:

• 🏗️Core or satellite fixed-income allocation: Investors seeking yield beyond traditional investment-grade bonds (or U.S. Treasuries) might use PCMM as a core holding — or as a satellite to supplement a core bond sleeve.

• 🚀Yield booster: In a broader, balanced portfolio (e.g., equities + bonds), PCMM could serve as the “income leg,” providing higher yield while still preserving some diversification.

• ⚖️Rate-hedge/floating-rate complement: Because CLOs often feature floating-rate features, PCMM may offer some resilience in periods of rising interest rates. Thus, it can complement longer-duration bond holdings vulnerable to rate increases.

• 🔓Alternative credit exposure: For investors seeking exposure to private credit and middle-market corporate debt — historically hard to access directly — PCMM provides a liquid, ETF-based solution that democratises an institution-style asset class.

PCMM at a glance

ETF Issuer: BondBloxx

Inception: 2024-12-02

Asset Class: Fixed Income

Underlying Index: PCMM is an active ETF

Geographical Focus: U.S.

Expense Ratio: 0.68% (as of last data point)

Dividend Yield: 6.47% (as of last data point)

Distribution Frequency: Monthly

Historical Performance

Even though PCMM is a relatively young ETF, we already have some performance data worth noting. Key metrics (as of late 2025) include:

• Since inception (Dec 2024 to Sept 2025): 5.45% total return.

• YTD (2025) performance: 5.67% through early December 2025.

• Dividend distribution schedule: The ETF distributes dividends monthly.

Because PCMM launched only in late 2024, there is no long-term (5+, 10-year) track record yet — but early results suggest the fund is delivering on its income objective.

ETF Radar View

The radar chart below shows the general characteristics of the ETF:

Top 3 Reasons to Invest

1. Professional Management with Strong Protections: Private credit investments typically offer stronger investor protections, with better covenants and collateral structures than public market alternatives. BondBloxx's active management approach allows the team to navigate the complex CLO market, selecting securities with the most attractive risk-reward profiles while maintaining focus on capital preservation.

2. Access to Institutional-Grade Private Credit: PCMM provides retail investors with access to private credit strategies, specifically middle-market lending, which has a history of superior risk-adjusted returns compared to public markets. The ETF invests in loans to private middle-market companies, offering exposure to an otherwise difficult-to-access asset class.

3. Attractive Yield in a Rising Rate Environment: PCMM offers a 6.47% dividend yield, ideal for income generation amid a low traditional fixed-income environment. Its floating-rate CLOs benefit from rising interest rates, as coupon payments increase over time. This makes PCMM appealing in a macroeconomic landscape where central banks are likely to keep interest rates high for longer periods.

Top 3 Reasons Not to Invest

1. Limited Performance History: With an inception date of December 2, 2024, PCMM lacks a long-term track record across various market cycles. Investors don't yet have evidence of how the fund might perform during significant economic downturns or periods of severe credit stress. This limited history makes it challenging to fully assess the fund's risk management capabilities and downside protection.

2. Credit and Default Risk Exposure: Private credit borrowers are generally riskier than those in public markets, like high-yield bonds and leveraged loans. Middle-market companies that utilise private credit often have weaker financial profiles and less diversified business models, making them more vulnerable to economic downturns. Therefore, investors should be aware that private credit carries higher risks than public market options.

3. Liquidity Mismatch Concerns: PCMM trades daily like other ETFs, but the underlying private credit CLO market can be highly illiquid during periods of stress. This can create a mismatch between the ETF's daily liquidity and its assets' liquidity, leading to notable price discounts or premiums relative to net asset value during market crises. With assets of around $186 million, the fund has reasonable scale, though smaller ETFs may struggle with liquidity in volatile markets.

Riding the Private Credit Wave🌊

PCMM offers an innovative approach to ETF investing by making private credit strategies accessible to a wider range of investors, rather than just institutional ones. With a focus on private credit collateralized loan obligations (CLOs), the fund delivers attractive yields, capital preservation, and diversification benefits. Its expense ratio is 0.68%, and it has demonstrated solid performance since its December 2024 inception.

However, investors should consider the fund's limited track record, the complexity of CLO structures, and the risks associated with private credit. As with any specialised ETF, PCMM should be part of a diversified portfolio rather than a standalone investment.

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DISCLAIMER: This article is for informational purposes only and should not be considered as investment advice. Always conduct your own research and consult with a financial advisor before making investment decisions.