Investors gain access to private debt through new ETF proposal
- State Street and Apollo Global Management have jointly filed an application with the SEC for a new ETF that directly holds private debt.
- The proposed ETF, which will primarily invest in public credit, is designed to provide investors easier access to private market investments.
- The initiative highlights a growing trend in the finance industry to integrate private credit opportunities into more liquid investment structures.
State Street Corp., in collaboration with Apollo Global Management Inc., has applied to the U.S. Securities and Exchange Commission (SEC) to create a pioneering exchange-traded fund (ETF) that would enable direct investment in private debt. This application was filed recently as part of a broader trend in the asset management industry aiming to merge exchange-traded funds with private credit investing. This ETF, named SPDR SSGA Apollo IG Public & Private Credit ETF, plans to primarily invest in public credit while allocating just 15 percent of its assets to private debt, in line with SEC regulations. Experts acknowledge the challenges this presents due to the illiquid nature of private assets within a typically liquid investment vehicle. The growing interest in private credit investments is evident, with private credit markets reaching approximately $1.7 trillion. Notably, firms like Ares Management Corp., Blackstone Inc., and Carlyle Group Inc. are leading providers in this space, contributing to its rapid expansion. Moreover, the launch of new funds, such as Calgary-based Accelerate Financial Technologies' Diversified Credit Income Fund, signifies increased opportunities for investors seeking exposure to private loans through public markets. Analysts speculate that as market conditions evolve, these innovative investment vehicles will pave the way for greater accessibility and liquidity for private market assets.