Private credit edges into DC plan defaults

PIMCO’s 2026 Defined Contribution Consulting Study reports that 89% of plan sponsors said they would add private market exposure to target-date funds or managed accounts within a year, up from 37% in the 2025 study. The survey gathered responses from 38 consulting and advisory firms. The study identifies private credit as the private asset most likely to enter DC plan defaults.

Survey breakdown shows 91% of aggregators and 52% of institutional consultants ranked private credit as one of the most probable private assets to be added to DC multi-asset funds in the near term. Intermediaries cited the need to balance return potential with cost, asset quality and the operational requirement to preserve daily liquidity for participants.

Private credit has typically been accessed through vehicles with long lock-ups, complex tax reporting and higher fees, which create tensions for DC plans that require daily valuation and participant liquidity.

Exchange-traded funds are one structure market participants point to for addressing those operational constraints by packaging private lending exposure into transparent, publicly traded instruments. The Simplify Private Credit Strategy ETF (PCR) seeks income and capital appreciation by exposing investors to a screened set of public business development companies and closed-end funds whose portfolios are at least half invested in private corporate lending.

PCR uses the VettaFi Private Credit Index to screen holdings and obtains economic exposure through total return swaps, a mechanism that allows the ETF to offer daily liquidity while tracking private credit-related returns. The fund’s net expense ratio is 0.76%, and its active mandate lets managers perform ongoing credit underwriting, select managers and adjust allocations as market conditions change.

Fund disclosures state that VettaFi receives a licensing fee for the index and that it is not the issuer, sponsor or seller of the ETF and has no obligation or liability related to the ETF’s issuance, administration, marketing or trading. The PIMCO study notes private credit’s appeal stems from higher yields relative to many public fixed-income products and that consultants and plan sponsors are increasingly focused on operational solutions to integrate private market exposures into DC defaults.