PCR ETF yields 11.48% and uses swaps for private credit

Simplify Investments’ PCR ETF reported an 11.48% distribution rate as of May 31, 2026. The fund seeks income and capital appreciation by investing most of its net assets in securities tracked by the VettaFi Private Credit Index and by entering total return swaps tied to those index constituents.

The VettaFi Private Credit Index follows private credit instruments held by publicly traded U.S. business development companies (BDCs) and closed-end funds that allocate more than half of their portfolios to non-public corporate loans, syndicated debt or high-yield bonds. PCR uses swaps to replicate the performance of those constituents rather than directly holding each underlying loan.

Total return swaps allow the ETF to deliver returns linked to private credit exposures while maintaining the liquidity and intraday tradability of an exchange-traded product. The swaps provide exposure to BDCs and closed-end funds without direct ownership of individual private loans.

Many of the underlying BDCs and closed-end funds hold floating-rate senior secured loans. Those loans have coupon payments that reset with short-term benchmarks such as the Secured Overnight Financing Rate (SOFR), which can make their interest income less sensitive to long-duration interest-rate moves that typically affect corporate bonds.

With interest rates remaining higher for longer, some fixed-income investors have sought alternatives to traditional corporate debt. Corporate bonds carry duration risk tied to Federal Reserve policy, while holdings that feature floating-rate coupons and wider credit spreads respond differently to changes in benchmark rates.

PCR reported the 11.48% distribution rate on May 31, 2026. The ETF offers a way for public market investors to gain exposure to private credit instruments through an ETF wrapper that uses a systematic, active approach to replicate the index via swaps.

VettaFi LLC is the index provider for the VettaFi Private Credit Index and receives an index licensing fee. VettaFi is not the issuer, sponsor, endorser or seller of PCR and has no obligation or liability related to the ETF’s issuance, administration, marketing or trading.