State Street Investment Management has launched an investment-grade public and private asset-backed securities (ABS) exchange-traded fund (ETF), expanding investor access to structured credit.
The $5tn (£3.7tn) manager said the ABS ETF – dubbed PRAB – will give investors exposure to collateralised loan obligations as well as residential and commercial mortgage-backed securities.
State Street said the public and private ABS exposure was launched to address investor demand for higher-rated, income-oriented strategies and to help diversify sources of bond portfolio income.
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“While the global asset-backed finance market exceeds $20tn, ABS has long been underrepresented in investor portfolios,” said Anna Paglia, chief business officer of State Street Investment Management. “With PRAB, we’re expanding investor access to a higher quality yet largely untapped part of the global credit market that offers diverse potential income streams and the potential for higher yields compared to corporate bonds with a similar risk profile.”
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The fund’s private ABS allocation may include, but is not limited to, securities sourced by Apollo Global Securities, State Street said.
The ABS ETF will be managed by State Street’s active fixed income team.
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