Find Income in 2026 With Private Credit

Core Insights - The Federal Reserve is expected to implement a shallow interest rate cut cycle in early 2026, prompting financial advisors to seek new income sources for portfolios [1] - The Secured Overnight Financing Rate (SOFR) is moderating towards 3.75%, while the yield on the Bloomberg U.S. Aggregate Bond Index has decreased to approximately 4.16% as of January 12, 2026, indicating a need for investors to look beyond traditional fixed income for yield generation [1] Group 1: Investment Opportunities - The Simplify Private Credit Strategy ETF (PCR) presents a strong alternative for maintaining high income in portfolios, targeting a distribution rate that exceeds standard credit benchmarks with a yield of 12.3% as of late 2025 [2] - PCR is based on the VettaFi Private Credit Index and offers a significant premium over core bond funds, making it an attractive option for income generation [2] Group 2: Structural Advantages - Traditional bonds carry significant duration risk in a changing rate environment, but PCR's underlying Business Development Companies (BDCs) utilize floating-rate senior secured loans, allowing the fund to capture wider spreads even as benchmark rates soften [3] - Major BDC holdings like Ares Capital (ARCC) maintain a conservative profile with a weighted average yield of approximately 9.5% on their debt portfolio, enhancing the attractiveness of PCR [4] Group 3: Strategic Shifts for Advisors - Advisors can strategically pivot from cash equivalents to PCR to generate diversified yield in portfolios, accessing the private credit premium through a diversified, institutional-grade vehicle while maintaining the flexibility of the ETF structure [5] - The ETF structure of PCR provides daily transparency and liquidity, which is crucial for advisors managing heightened market volatility [4]