State Street unveils latest private-public credit ETF

State Street Investment Management (State Street IM) has launched its second exchange-traded fund (ETF) incorporating public and private credit.

The State Street Short Duration IG Public & Private Credit ETF (PRSD) is a short-term bond fund that seeks to invest at least 80 per cent of its portfolio in investment-grade public and private credit instruments.

Like its predecessor, which launched earlier this year, the new ETF will invest in private credit opportunities sourced by Apollo Global Management.

However, the asset manager says the new vehicle expands its product suite to include a short-term bond strategy.

The fund targets a duration between one and three years, and private credit will generally make up 10 to 35 per cent of the portfolio.

“Private credit is one of the fastest-growing segments of the market in recent years, but has historically been an underutilised allocation in portfolios,” said Anna Paglia, chief business officer of State Street IM.

“That changed earlier this year when we launched PRIV – the SPDR SSGA IG Public & Private Credit ETF – a core bond fund offering exposure to a combination of investment-grade public and private credit ETF.

“Now, PRSD builds on the launch of PRIV and continues the convergence of public and private markets by expanding our lineup to include a short-term bond strategy that can be used to pursue potential excess returns while managing duration risks.”

State Street IM’s latest ETF does not incorporate Apollo within its name.

Earlier this year, the US Securities and Exchange Commission (SEC) raised concerns about the previous ETF, which was initially called the SPDR SSGA Apollo IG Public & Private Credit ETF.

The regulator highlighted the use of Apollo in the fund’s name, saying it was misleading. It asked the firms to “revise the fund’s name to reflect the limited nature of Apollo’s relationship with the fund.”

Since then, it has been rebranded as the SPDR SSGA IG Public & Private Credit ETF.