Why Flows Into State Street’s Public-Private ETF Are Drying Up
The launch of PRIV was called a watershed moment in February, but has garnered little interest from investors since.
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Not exactly the “watershed moment” the industry was expecting.
The heavily anticipated launch of State Street’s PRIV, the first ETF to package public and private investments into a single product, made waves after its launch in late February. Fast-forward two months, and that enthusiasm is drying up. The SSGA IG Public & Private Credit ETF pulled in just $55 million in assets since Feb. 29 — less than notable for a new product by a storied issuer. Just $5 million in assets was secured in its first two weeks, and inflows have been nonexistent in recent weeks, per Bloomberg.
“I am not surprised about the flows — or lack thereof,” said Paul Schatz, president of Heritage Capital. The fund is so new that many firms are simply waiting until it matures, and without a sizable chunk of assets already invested, advisors are having trouble trusting it. “PRIV has no flows because there is no sex appeal, very little marketing and no education that I know of,” he told ETF Upside.
Public Displays of Investment
One underlying issue may be that it’s not really holding all that much private credit. While the fund claimed it could hold more than the SEC’s 15% limit on illiquid investments, PRIV’s private credit exposure clocked in at about 5% as of March 3, per a CFRA analysis. Public corporate debt, treasurys, and agency pass-throughs accounted for 76% of its exposure. In fact, PRIV’s current holdings are actually widely owned by many other mutual funds and ETFs.
To be fair, other newly launched private credit ETFs have also had relatively slow starts, not surprising in the current market environment. In fact, PRIV’s $55 million in assets are on par with competitors:
- The BondBloxx Private Credit ETF (PCMM) had $108M in assets.
- The Virtus Private Credit ETF (VPC) had $55 million.
“Given the uncertainty with tariffs and the macroeconomic environment, investors are in a ‘risk-off’ mindset,” said Aniket Ullal, head of ETF research at CFRA.
What a Performance. Advisors will likely come around once the private-market products start beating major indices: The S&P 500 gained more than 23% last year. Schatz said he approaches it like Bitcoin: small allocations of 5% to 10%, but PRIV is going to need a longer track record. Once the returns start to trickle in, advisors will start to test the waters.
“The asset does warrant attention and a position in a well-diversified portfolio,” Schatz said. “It’s just going to take time.”
