State Street's PRIV Misses Mark on Private Credit Promise
The recently launched SPDR SSGA Apollo IG Public & Private Credit ETF (PRIV) garnered widespread attention for its groundbreaking approach to private credit investing, but analysis reveals a gap between its marketing and reality.
According to a research report from CFRA, the fund received Securities and Exchange Commission approval to exceed the standard 15% limit on illiquid securities stipulated in the Investment Company Act of 1940. Investors anticipated PRIV would hold between 10% and 35% of its portfolio in private credit instruments.
Despite regulatory permission to increase private credit exposure beyond traditional limits, PRIV currently holds just 5% of its portfolio in private credit assets, according to CFRA, with the vast majority in highly liquid public securities that offer little differentiation from conventional fixed-income ETFs.
The fund's current portfolio differs from the private credit focus many expected. CFRA's analysis shows 42% of PRIV's exposure is in public corporate debt, with another 19% in securitized agency mortgages and 15% in Treasuries or cash instruments.
"While this ensures that its portfolio is liquid, it also makes it less differentiated relative to other fixed-income funds, since its constituents are widely held by mutual funds and other ETFs," wrote Aniket Ullal, head of ETF research at CFRA, and Sourav Srimal, senior vice president of solutions at SOLVE, in their joint report.
The liquidity profile further underscores how conventional PRIV's current holdings are. Over 75% of the portfolio is classified as liquid, with 62% rated as highly liquid, based on Trade Reporting and Compliance Engine data aggregated by SOLVE.
This liquidity composition contrasts with other private credit options like the BondBloxx Private Credit CLO ETF (PCMM) and VanEck BDC Income ETF (BIZD), which have fewer holders of their underlying securities, the report shows.
On average, PRIV's constituents are held by 110 other mutual funds, exchange-traded funds or insurance firms, while PCMM's holdings average just four other holders, the report stated. Only 11% of PRIV's constituents were held by fewer than 10 other investment vehicles.
The fund's yield reflects its conventional portfolio composition. PRIV's published yield to maturity, as of March 3, was 5.44%, lower than BIZD's 9.02% and PCMM's 7.44% 30-day SEC yields.
PRIV's arrangement with Apollo Global Securities, which contractually agreed to provide intraday executable bids on private credit investments, appears largely unused given the fund's current highly liquid portfolio composition, according to the CFRA report.
The report suggests that the ETF's composition could evolve: "Going forward, it seems likely that this actively managed ETF will start to take on more private credit that is sourced from Apollo."
The agreement requires Apollo to publish three executable quotation sheets daily to buy PRIV-held securities sourced from Apollo, with quotes "no worse than those offered to similarly situated clients," according to the CFRA analysis.Permalink | © Copyright 2025 etf.com. All rights reserved
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