State Street Investment Management is continuing its push into the intersection of public and private credit with the launch of a new ETF.
The firm announced today the launch of the State Street IG Public & Private ABS ETF (PRAB). This active ETF seeks to provide institutional-grade access to asset-backed securities (ABS), a segment frequently underrepresented in traditional advisor portfolios.
The launch expands SSIM’s lineup that offers private credit exposure. The firm’s existing public-private ETF offerings — the State Street IG Public & Private Credit ETF (PRIV) and the State Street Short Duration IG Public & Private Credit ETF (PRSD) — have collectively attracted approximately $916 million in assets. PRAB aims to build on this momentum by focusing specifically on investment-grade ABS.
A primary driver for PRAB is the structural limitation of the Bloomberg US Aggregate Bond Index, according to a statement from the firm. Many ABS sectors have historically had limited or no representation within the Agg, leaving core bond allocations potentially less diversified than perceived. PRAB seeks to fill this gap by allocating across public and private ABS, including collateralized loan obligations (CLOs) and residential and commercial mortgage-backed securities.
The private portion of the portfolio will include securities sourced by Apollo Global Securities. This partnership allows the fund to tap into private credit markets that typically offer a yield premium over similarly rated corporate bonds. The fund offers “diverse potential income streams and the potential for higher yields compared to corporate bonds with a similar risk profile,” Anna Paglia, chief business officer of State Street Investment Management, said in a statement.
The Evolving Private Credit ETF Landscape
The appetite for private credit has intensified over the last year. Other funds, including the Simplify VettaFi Private Credit Strategy ETF (PCR) and the BondBloxx Private Credit CLO ETF (PCMM), also offer private credit exposure.
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