State Street’s PRIV Lands First Daily Inflows in Months

Don’t call it a comeback. 

Inflows into State Street’s much anticipated PRIV, the first exchange-traded fund to package public and private investments into a single product, have dried up in notable fashion over the past three months. Well, don’t look now, but the SPDR SSGA IG Public & Private Credit ETF pulled in more than $18 million in assets over two days last week, marking the first time there were net inflows in the fund since March 4, according to FactSet data. It’s a head-scratching dry spell for a fund that was the toast of the town in late February but has struggled to land a date ever since.

“The inflow is not very substantial in the context of State Street’s ETF assets or the overall industry,” said Aniket Ullal, head of ETF research and analytics at CFRA. “Given the initial anticipation around this launch, it is more surprising that PRIV had zero inflows over a three-month period.” 

New Kids on the Block

The issue may just be the fund’s novel approach, which led the SEC to fire off a sternly worded letter to State Street just hours after its launch in March. The agency listed a number of concerns — like liquidity, valuations and even its name — that State Street said would be addressed the following day. It was a bizarre exchange that may have left some advisors favoring a wait-and-see approach while others hold out for the fund to build a performance track record before testing the waters. 

PRIV has gained about 1.3% on a total return basis since its Feb. 26 launch, according to an analysis by Bloomberg. That’s on par with other ETFs that hold similar corporate debt:

• The iShares iBoxx $ Investment Grade Corporate Bond ETF returned 0.9% over that same time.
• The iShares iBoxx High Yield Corporate Bond ETF has gained about 2%.

Just Got Ghosted. Funds that combine public and private assets are still very much in their infancy, and it’s probably too early to judge success on the whole. Keep in mind, other structures like interval funds or closed end funds may be more attractive to investors for these kinds of private credit opportunities, Ullal said. While ETFs are known for their simplicity and ease of trading, private credit — which doesn’t trade daily as public equities do — may simply be better suited to funds that price monthly or quarterly. 

“Advisors probably need more time to learn and evaluate this asset class, so it would be premature to conclude at this stage that there will be no advisor interest in the future,” Ullal said.