For financial advisors searching for differentiated fixed income solutions, the WisdomTree Alternative Income Fund (ticker: HYIN) offers access to a distinctive segment of the credit market—private and alternative credit—with the ease, transparency, and liquidity of an exchange-traded fund (ETF). With a four-year track record and strong trailing yield performance, HYIN provides a curated, diversified approach to credit investing that stands apart from traditional strategies.
In an interview with The Wealth Advisor’s Scott Martin, Kevin Flanagan, Head of Fixed Income Strategy at WisdomTree, and Chris Acito, CEO of Gapstow Capital Partners, discussed how HYIN fits into portfolio construction, the advantages of its underlying index, and why demand for private credit exposure is accelerating among financial advisors.
A Four-Year Track Record in a Rapidly Growing Category
HYIN launched in early 2021, at a time when interest rates hovered near historic lows. The fund seeks to track the performance, before fees and expenses, of the Gapstow Liquid Alternative Credit Index (GLACI),1 which aggregates listed vehicles that invest in private credit, including business development companies (BDCs),2 mortgage real estate investment trusts (mREITs),3 and closed-end funds (CEFs).4
“We’re excited about [the four-year anniversary], and I think it underscores how we were pioneers in the field,” Flanagan says. “Everyone’s talking private credit, private credit, and I give Chris and Gapstow a lot of kudos on that front. They were way ahead of the game.”
The early entry into a now-popular asset class positions HYIN as a veteran in a market experiencing a surge in product launches. Unlike new offerings still building a track record, HYIN gives advisors access to real performance data—and, crucially, a dividend history that shows durability.
“The fact that we’re not a copycat, not moving into a hot trend, that we’ve been around, we pioneered this, goes a long way to the investor base,” Flanagan adds.
Why Private Credit Now—and How HYIN Delivers
Advisors facing the limitations of the traditional 60/40 model are increasingly looking to credit strategies that offer higher yield potential and diversification beyond the Bloomberg U.S. Aggregate Bond Index (the Agg) and Treasury indexes. HYIN aims to provide a differentiated income stream sourced from alternative credit markets that are often inaccessible to individual investors.
“For us, it’s the complement,” Flanagan explains. “We like to start with a core or maybe a barbell approach and then add in, and this is where the private credit space fits in nicely—that ‘plus component’ that investors are looking for. Even though rates have pretty much risen to what we would consider to be historically normal levels, you’re still getting that extra plus in the private credit, in the alternative credit aspect of investing for fixed income.”
Unlike speculative high-yield strategies that “reach” for returns by taking on excessive risk, HYIN is designed to search for yield through its diversified and rules-based approach to security selection. The result is an allocation to credit that has historically delivered strong yields while mitigating idiosyncratic risk.
Flanagan emphasizes that investor demand is not slowing, and in fact, it continues to expand across a broader spectrum of advisors and client types. “The interest in private credit is not going away and we would argue it’s probably just going to continue to build,” he says.
Inside GLACI: Curated Exposure to Private Credit
The Gapstow Liquid Alternative Credit Index, which HYIN seeks to track, is purpose-built to provide access to a range of credit assets. According to Acito, the approach behind developing the index was intentional from the start.
“We wanted to create a turnkey solution for investors wanting a diversified portfolio of corporate, real estate, and consumer credit exposures,” he says. “Therefore, the product can serve as an initial ballast to an individual’s private credit allocation.”
The index includes only listed vehicles with a track record of liquidity and market size. To be eligible, securities must have traded for at least 90 days, maintain an average daily volume above $750,000 over the past six months, and exceed $100 million in average market cap during that period.
Importantly, GLACI seeks to avoid overexposure to any single issuer or management team. “The index is equally weighted,” Acito explains. “We chose this approach to reduce the idiosyncratic risk of individual constituents.”
The design gives HYIN exposure to a wide array of high-performing managers across the private credit space while mitigating potential blowups from a single name or strategy.
Where the Yield Comes From—and Why It’s Sustainable
At the core of HYIN’s appeal is its yield. While many ETFs advertise eye-catching numbers, few have the structural underpinning to deliver those distributions sustainably. HYIN stands out by offering access to instruments that are not only high-yielding but also obligated to pass income through to shareholders.
“At the end of April, the fund’s underlying index had an estimated distributable yield5 of more than 12%,” Acito says. “That is, the underlying constituents have (collectively) an underlying dividend of more than 12% of their market capitalization on an annualized basis.”
Acito credits three key factors for the yield level: (1) the income distribution requirements of BDCs, mortgage REITs, and CEFs; (2) their holdings of higher-yielding private and alternative credit; and (3) their strategic use of leverage.
That yield—well above Treasury and traditional corporate bond benchmarks—is not hypothetical. “The yield, for example, isn’t just a theoretical expectation; it’s there in the dividend history,” Acito notes. “The dividend was sustainable.”
Flows and Demand Reflect Growing Advisor Interest
As more advisors explore alternatives to traditional fixed income, flows into private credit vehicles have accelerated. HYIN is benefiting from that trend—not just because of market timing but because of its established presence and performance.
“This year and second part of 2024, we did begin to see flows pick up some momentum into the overall space,” Flanagan says. “I would imagine that’s going to continue going forward, especially now that we seem to have gotten into a better place market-wise.”
That momentum is supported by a broader awareness of private credit in the ETF wrapper. “I don’t think it was coincidental that we saw a pick-up in interest in the fourth quarter of 2024,” Acito says. “There were many ‘private credit ETF’ news stories, particularly focused on new product launches. WisdomTree was in the enviable position to be able to politely remind people that they had come to market with such a product nearly four years prior.”
That head start continues to serve HYIN well. With an established track record and structural transparency, the fund is positioned to both capture attention and retain investor confidence in a market becoming increasingly competitive.
Portfolio Role and Allocation Guidance
While interest in private credit is strong, advisors still face the question of how to size the allocation within client portfolios. HYIN can serve as a stand-alone sleeve for alternative income or as a broader diversifier within fixed income allocations.
Acito frames potential HYIN positioning in terms of broader portfolio evolution, where the traditional model is being reassessed. “We’re at a very interesting inflection point in the evolution of asset allocation,” he says. “Credit is becoming recognized as a distinct asset class. It’s not fixed income, it’s not equity, but like those two asset classes, it has a role within the portfolio.”
Flanagan adds that there’s no one-size-fits-all answer to allocation sizing—it depends on the advisor’s practice and the client’s needs, with geography often playing a role in the varied interest in private credit. “I was in southern California towards the back end of last year, and it was an extremely hot topic there, so perhaps percentages are even larger,” Flanagan notes.
Advisors may begin with a 5% to 10% slice of fixed income and expand from there as comfort with the strategy increases. The key is building client understanding around the structural advantages of listed private credit vehicles—steady income, liquidity, and diversification.
A Distinctive Option in a Crowded Category
With HYIN, WisdomTree and Gapstow have created a rare offering: a liquid, transparent, rules-based vehicle that delivers consistent access to private credit—and a meaningful yield advantage—without requiring advisors to sacrifice portfolio flexibility or due diligence standards.
As Flanagan puts it, “It is great to call attention to this space and continue to hopefully build momentum in the future.”
For advisors managing high-net-worth or income-focused clients, HYIN offers a practical and proven tool to introduce private credit exposure in a portfolio-ready ETF format. Backed by experienced managers, curated index construction, and a yield profile that continues to turn heads, HYIN deserves a closer look.
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Additional Resources
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Disclosures
1 Gapstow Liquid Alternative Credit Index (GLACI): A total return index that reflects the equally weighted performance of 35 publicly traded alternative credit vehicles (PACs) chosen from six sub-sectors within the PAC universe.
2 Business development company (BDC): A special type of publicly traded closed-end fund set up by Congress to channel capital into small, midsize or financially stressed U.S. firms. A BDC lends to, or takes equity stakes in, these companies and passes most of the income it earns to shareholders, typically via sizable dividends.
3 Mortgage REITs (mREITs): A real-estate investment trust that finances property rather than owning it. mREITs buy or originate home and commercial mortgages (or the mortgage-backed securities built from them) and make money from the interest those loans generate.
4 Closed-end fund (CEF): An investment company that raises a fixed pool of money only once—at its initial offering—then lists those shares on an exchange. After that, investors buy and sell among themselves, so the market price can drift above or below the underlying net asset value (NAV).
5 Distributable yield: Calculated by annualizing the most recent fund distribution and dividing by the fund’s current net asset value (NAV). The yield represents a single distribution from the fund and does not represent the total returns of the fund. Distinct from trailing yield: Also called the “trailing-12-month (TTM) yield,” shows the cash income an ETF actually paid out over the last 12 months—dividends, interest and other distributions—divided by the fund’s current share price. It’s a backward-looking snapshot of what investors did earn, not a promise of what they will earn.
Investors should carefully consider the investment objectives, risks, charges and expenses of the Fund before investing. For a prospectus or, if available, the summary prospectus containing this and other important information about the Fund, call 866.909.9473 or visit WisdomTree.com/investments. Read the prospectus or, if available, the summary prospectus carefully before investing.
There are risks associated with investing, including possible loss of principal. The Fund is considered to be non-diversified, which means that it may invest more of its assets in the securities of a single issuer or a smaller number of issuers than if it were a diversified fund. Higher yielding securities, sometimes referred to as junk bonds, may present additional risk because these securities may be less liquid and present more credit risk than investment grade bonds. The Fund invests in alternative credit sectors through investments in underlying closed-end investment companies (“CEFs”), including those that have elected to be regulated as business development companies (“BDCs”), and real estate investment trusts (“REITs”). The value of a CEF can decrease due to movements in the overall financial markets. BDCs generally invest in less mature private companies, which involve greater risk than well-established, publicly traded companies, and BDCs are subject to high failure rates among the companies in which they invest. By investing in REITs, the Fund is exposed to the risks of owning real estate, such as decreases in real estate values, overbuilding, increased competition and other risks related to local or general economic conditions. The Fund invests in the securities included in, or representative of, its Index regardless of their investment merit and the Fund does not attempt to outperform its Index or take defensive positions in declining markets. Please read the Fund’s prospectus for specific details regarding the Fund’s risk profile.
Statements concerning financial market trends are based on current market conditions, which will fluctuate.
Kevin Flanagan is a Registered Representative of Foreside Fund Services, LLC.
WisdomTree Funds are distributed by Foreside Fund Services, LLC.
