On Thursday, WisdomTree Investments, Inc. (NASDAQ: WETF), an exchange traded fund (ETF) and exchange-traded product (ETP) sponsor and asset manager, announced the launch of the WisdomTree Alternative Income Fund (HYIN). HYIN seeks to track the price and yield performance, before fees and expenses, of the Gapstow Liquid Alternative Credit Index (GLACI). It carries an expense ratio of 3.20%.
Gapstow Capital Partners, a recognized alternative credit leader, has created the GLACI, which is an equal-weighted index that tracks the performance of debt and debt-based securities of approximately 35 “Publicly Traded Alternative Credit Vehicles” (PACs) that consist of Business Development Companies (BDCs), Real Estate Investment Trusts (REITs), and Closed-End Funds (CEFs).
“Fixed income investors are facing some specific market challenges, including historically low rates, both in the U.S. and on a global scale,” explained Kevin Flanagan, WisdomTree’s Head of Fixed Income Strategy.
He continued: “One way for investors to search for income in a yield-challenged environment is through alternative credit, which consists of debt and debt-based securities that have a higher risk-return profile than traditional high yield bonds. With HYIN, we’re offering investors a vetted and thoughtful option to access exactly that.”
Chris Acito, Gapstow’s CEO, said: “GLACI is an alternative credit index which is diversified, liquid, and investable. Its design has been informed by our twelve years of experience in multi-sector credit portfolio construction. We’re very pleased that WisdomTree has chosen GLACI in bringing HYIN to market.”
HYIN selects PACs from six alternative credit sectors, representing different forms of traded credit, structured credit, and private credit. Against the backdrop of low yields in treasuries, corporate bonds, and equities, HYIN offers considerable potential yield advantages and provides a moderate to low correlation to equity and fixed income markets.
Thomas Skrobe, WisdomTree’s Head of Product Solutions, added: “Historically, alternative credit markets have primarily been limited to institutional or ultra-high net worth investors typically through private fund structures, but these solutions for alternative income will be a natural complement within model portfolios as global rates remain at historically low levels. That’s why ‘quality and income’ is one of WisdomTree’s core, ongoing investment themes and serves as a differentiating factor in our approach to both equity & fixed income solutions.”