ETFs, the Irish Investment Account and Lessons from Private Credit

By Rogha ETF · 8 October 2026

Published 8 October 2026 · Commentary

As Ireland prepares to broaden retail access to investment markets through the new Irish Investment Account, recent events in private credit offer a useful reminder: making an investment easier to access does not necessarily make the risks underneath it easier to understand.

Liquidity has been a major theme in private credit this year - several large US private-credit funds offer investors regular periodic opportunities to sell shares back to the fund, even though the underlying loans may themselves be illiquid & not readily tradeable. In 2026, investors in Apollo Debt Solutions requested the repurchase of around 16.8% of outstanding shares in one quarter, against a stated quarterly liquidity level of 5%. Blue Owl Credit Income Corp saw a similar pattern, with redemption requests well above its 5% quarterly tender limit.

It would be too simplistic to describe those mechanisms as having failed. The limits were part of the product design. They were intended to give investors some access to their capital while recognising that the underlying assets could not necessarily be realised quickly.

The more interesting issue is what investors thought they had bought. There is a meaningful difference between being able to request a redemption every quarter and being able to redeem all of your investment every quarter. The product documentation may make that distinction clear, but investor expectations do not always follow legal drafting quite so neatly. That is where the recent private-credit experience becomes relevant to ETFs.

The IIA will make investing easier

The proposed Irish Investment Account is expected to open on 1 July 2027, subject to legislation. Its purpose is to make investing simpler and more accessible, and the proposed eligible investments include retail-suitable investment funds, including ETFs which are likely to be an important part of that story. Irish households already held approximately €5.6 billion in ETFs at the end of the first quarter of 2026, around a third of their investment-fund holdings.

For many investors, ETFs are a very effective way of gaining diversified market exposure at relatively low cost. But they can also look simpler than they really are. Buying an ETF is straightforward. Understanding exactly what sits inside it can be less so. That matters particularly for investors moving from deposits or cash savings into markets for the first time.

The Department of Finance itself notes that retail investors may lack the knowledge, financial literacy and experience needed to understand financial instruments and their risks. At the same time, the IIA is intended to make investing simpler, clearer and more accessible. That is precisely why investor understanding matters alongside access. Three areas deserve particular attention: liquidity, diversification and risk.

Liquidity: the ETF and the assets underneath it are not the same thing

ETF shares trade on an exchange throughout the day. For an investor looking at a brokerage screen, that naturally creates a sense of liquidity. There is a quoted price and, under normal market conditions, the ETF can usually be bought or sold quickly. But ETF liquidity has more than one layer. Investors buy and sell ETF shares in the secondary market. Behind that sits the primary market, where Authorised Participants can create and redeem ETF shares using the underlying securities.

For a large ETF holding highly liquid developed-market equities, this distinction may rarely trouble a retail investor. It can become more important in ETFs holding assets such as corporate bonds, high-yield credit, emerging-market debt or other securities that trade less frequently. The Central Bank of Ireland has previously highlighted this distinction. The liquidity available in the ETF market cannot be considered entirely separately from liquidity in the underlying assets.

That does not make an ETF comparable with a semi-liquid private-credit fund. The structures are very different. But there is a common principle worth retaining: the ease with which the wrapper trades should not be confused with the liquidity characteristics of everything held inside it.

Diversification: counting holdings is not enough

For retail investors, diversification may be the more important issue. An ETF containing 500 companies sounds diversified, and in many cases it will be. But the number of holdings only tells part of the story. A broad index can still have significant exposure to a relatively small number of very large companies. It can also carry substantial concentration in a particular country, sector, investment style or economic theme.

The same issue arises when investors own several ETFs. Three ETFs on a portfolio screen may look like three separate investments, but the underlying holdings can overlap considerably. A global equity ETF, a US equity ETF and a technology ETF, for example, may all have meaningful exposure to many of the same large companies.

So there is a difference between owning a large number of securities and owning a large number of genuinely different sources of risk. That distinction could become increasingly important if the Irish Investment Account succeeds in bringing a new group of investors into capital markets.

A risk score is only a starting point

An ETF’s risk indicator is useful, but it compresses a lot of information into a single number. It does not tell an investor exactly what is driving that risk, how concentrated the exposure is, or how the investment might respond to different market conditions.

Two ETFs with similar risk scores can therefore be very different investments. One might track a broad global equity market, while another is concentrated in technology companies. A bond ETF might derive much of its risk from interest-rate movements, while an emerging-market debt ETF could combine credit, currency and liquidity risks.

The point is not that the risk score is misleading. It is that investors still need to understand what sits behind it. That becomes particularly relevant in the context of the Irish Investment Account. The IIA will make it easier for retail investors to hold a range of investments within a single account. An ETF’s eligibility for the IIA should not be confused with an assessment that it is low risk or suitable for every investor. What matters is the underlying exposure: what the ETF owns, where its returns are expected to come from, how concentrated it is and what could cause it to lose value.

Four questions worth asking

For an investor considering an ETF within the IIA, four questions are a useful starting point.

What does this ETF actually own? The name of the fund is not enough. The underlying index, major holdings and principal exposures matter.

How diversified is it in economic terms? Look beyond the number of securities to concentration by company, sector, geography and investment theme.

Where does the risk come from? Equity risk, interest-rate risk, credit risk, currency risk and liquidity risk are different risks, even if they are all delivered through the same ETF structure.

How might it behave in a stressed market? Spreads can widen, premiums or discounts can emerge and underlying markets can become harder to trade. The fact that an ETF traded smoothly yesterday does not guarantee identical conditions tomorrow.

There is also a governance question

The Irish Investment Account may change more than the number of people investing in ETFs. It could also change the type of investor using them. That raises questions for ETF manufacturers, distributors, management companies and fund boards.

The Central Bank has already examined the primary and secondary market arrangements of Irish ETFs and required Fund Management Companies and their boards to strengthen oversight of Authorised Participants and contracted market makers, including due diligence, ongoing monitoring, board reporting and contingency planning.

If the IIA significantly broadens retail participation, another issue becomes increasingly relevant: Are investors’ perceptions of ETF risk, liquidity and diversification aligned with the risks and exposures actually embedded in the ETF?

That does not mean ETF boards should become financial advisers, nor should they be expected to assess individual investors. But a meaningful change in distribution should matter to governance. Boards and management companies should understand who is buying the fund, through which channels, how that investor base is changing and whether the way the product is described and distributed continues to support a reasonable understanding of the risks involved.

The broader lesson

Private credit and ETFs are fundamentally different products, and it would be misleading to suggest otherwise. The useful comparison is about investor expectations. A product wrapper can make access easier and transactions simpler. It can package a complicated set of underlying exposures into something that feels intuitive.

What it can't do is remove the economics underneath.

That is worth remembering as Ireland prepares to encourage broader participation in investment markets through the Irish Investment Account. ETFs can be effective tools for diversification and long-term investing. But wider adoption should not be judged only by how easy they are to buy. It should also be judged by whether investors understand what they own, where the risks come from and how diversified they really are.

Sources

Rogha provides educational information only and does not provide investment, financial or tax advice. Investments can fall as well as rise in value.