Finance
Expanding access to private credit
They’re generally reserved for the ultrawealthy and financial institutions.
But the exchange-traded fund industry is looking to give retail investors more access to alternative investments including private credit.
BondBloxx’s Joanna Gallegos thinks it’s a great idea despite the asset class’ reputation for charging high fees and academic research that have shown sluggish returns. Her firm launched the BondBloxx Private Credit CLO ETF (PCMM) about three months ago.
“We don’t believe in the velvet rope. We believe in connecting markets,” the firm’s co-founder and chief operating officer told CNBC’s “ETF Edge” this week. “People have not had access to it. It makes sense in a portfolio. People should have access to … a power tool like that in their portfolio.”
The fund invests around 80% of its holdings in private credit collateralized loan obligations, according to the BondBloxx website. Since its Dec. 3 debut, Gallegos’ fund is up 1%.
While the S&P 500 and tech-heavy Nasdaq just saw their worst weekly performances since last September, the BondBloxx Private Credit CLO ETF closed virtually flat.
BondBloxx Private Credit CLO ETF Performance
Gallegos, who’s the former head of global ETF strategy at J.P. Morgan Asset Management, thinks criticism surrounding alternative investment ETFs will fade.
“We heard the same push back [on] high-yield ETFs: ‘Oh, you can’t price that. It’s too expensive,”‘ she said. “Then, the ETF connected that market in a way that allowed investors to participate, [and] drove the prices down in the category in terms of distributed funds.”
‘Most people don’t need it’
But Strategas Securities’ Todd Sohn contends the so-called velvet rope isn’t worth going through. He said skeptical access to alternative investments will provide meaningful benefits to retail investors.
“Most people don’t need it,” the firm’s managing director of ETF and technical strategy said. “If you have a diversified portfolio of five low-cost ETFs, you’re pretty good, right?”
Finance
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Dutch digital bank Bunq is plotting re-entry into the U.K. to tap into a “large and underserved” market of some 2.8 million British “digital nomads.”
Pavlo Gonchar | Sopa Images | Lightrocket | Getty Images
Dutch digital bank Bunq on Tuesday said it’s filed for broker-dealer registration in the U.S. as it looks to further expand across the Atlantic.
Bunq CEO Ali Niknam said the broker-dealer application will be an initial step toward securing a full banking license. He couldn’t offer a firm timeline for when Bunq will secure this authorization in the U.S. — but said he’s excited for its growth prospects in the country.
Obtaining a broker-dealer license will mean Bunq “can offer our users who have an international footprint — which is the user demography we’re aiming for — a great number of our services,” Niknam told CNBC. Bunq mainly caters for “digital nomads,” individuals who can live and work from anywhere remotely.
Bunq will be able to offer most of its services in the U.S. with the exception of a savings account after securing broker-dealer authorization, Niknam added.
Bunq, which touts itself as a bank for “digital nomads,” currently has a banking license in the European Union. It has applied for an Electronic Money Institution (EMI) in the U.K. Bunq previously had operations in Britain but forced to withdraw from the country in 2020 due to Brexit.
Bunq initially filed for a U.S. Federal bank charter in April 2023. However, it withdrew the application a year later, citing issues between its Dutch regulator and U.S. agencies. The company plans to resubmit its application for a full U.S. banking license later this year.
65% jump in profit
Beyond the update on international expansion, Bunq also on Tuesday reported a 65% year-over-year jump in profit to 85.3 million euros ($97.2 million). That jump was primarily driven by a 55% increase in net interest income, while net fee income also grew 35%.
Similarly to fintech peers such as N26 and Monzo, Bunq has benefited from a high interest rate environment by pocketing yields on customer deposits sat at the central bank.
Bunq’s CEO told CNBC that, while high interest rates have certainly helped, more generally Bunq is seeing increased usage of the platform and has been focused on cost efficiency from an operational perspective.
“Because we are so lean and mean, and because we have set up all of our systems from scratch … we have been able to not only increase our profits, but also offer very good interest rates in the European market in general, and in the Netherlands specifically,” Niknam said.
More recently, central banks in the EU and U.K. and U.S. have moved to slash interest rates in response to falling inflation and concerns of an economic slowdown, which can bite into bank earnings.
Niknam said he’s not concerned by the prospect of rates coming down and expects potential declines in interest income to be offset by a “diversified” revenue mix that includes income from paid subscription products, as well as new features. Bunq recently launched a tool that lets users trade stocks.
“This is different in continental Europe to the U.K. We had negative interest rates for long,” Niknam told CNBC. “So as we were growing, actually our cost base was also growing because we had to pay for all the deposits that people deposited a Bunq so I think we’re in a great position in 2025
Bunq is coming up against heaps of competition, especially in the U.S. market. America is already served by established consumer banking giants, including JPMorgan Chase, Bank of America, Wells Fargo and Citigroup. It’s also home to several major fintech brands, such as Chime and Robinhood.
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