State Street Filing Spotlights Private Credit ETFs

State Street Global Advisors is doubling down on its push into the private credit space with a new ETF filing for the SPDR SSGA Short Duration IG Public & Private Credit ETF. Once launched, it will mark SSGA’s second foray into private debt ETFs, following the March debut of the SPDR SSGA Apollo IG Public & Private Credit ETF (PRIV).  

But despite growing interest in private equity strategies and funds like the ERShares Private-Public Crossover ETF (XOVR), investor enthusiasm hasn’t carried over into private debt products—at least not yet. State Street's PRIV has gathered only $54 million in assets, highlighting the challenges ETF issuers face in bringing private credit exposure to public markets.

The largest fund offering exposure to private debt is the VanEck BDC Income ETF (BIZD), which has gathered $1.6 billion in assets, but its AUM is lacking for a history that stretches back 13 years to inception.  

Private Credit ETFs: Will Advisors and Investors Embrace Them?

Advisors and investors have been slow to embrace private debt ETFs because they often fall short of delivering pure-play exposure to the booming private credit market. While headlines around record deal flow and high yields in private lending have piqued investor interest, ETFs like PRIV only offer a blend of public and private debt, rather than direct access to the private lending deals typically reserved for institutional players.

Another sticking point is transparency. Investors are used to the daily disclosure and clear holdings of traditional ETFs. Private credit ETFs, by contrast, tend to hold less liquid and more opaque assets, and rely on models for pricing rather than market quotes. That complexity, paired with modest yields after fees, has made advisors question whether these funds are worth the added layer of structure.

How Private Credit ETFs Work

Private credit ETFs provide investors exposure to the private lending market—where loans are made directly to companies outside of traditional banking channels—by packaging these assets into a publicly traded fund. However, because true private loans are illiquid and not priced daily, these ETFs typically hold a blend of private and public debt, often focusing on investment-grade credit with short to intermediate durations. 

The private credit portion may come from partnerships with asset managers specializing in private lending, and returns are generally generated through income from interest payments rather than capital appreciation. Unlike direct private credit investments, which often have high minimums and lock-up periods, private credit ETFs offer daily liquidity and lower entry points but with less direct exposure and more structural complexity.

Why Private Equity ETFs Have Gained More Attention

In contrast, crossover funds like XOVR have had more success because of their clear and compelling narratives. The ERShares fund invests in a mix of private and public companies, including high-profile private names like SpaceX, which gives investors the sense they’re getting early-stage access with public market liquidity. That’s a powerful selling point.

XOVR also benefits from a more intuitive structure, as its blend of holdings is easier for advisors and retail investors to understand. Rather than trying to replicate a private credit strategy, it offers growth exposure through innovative private firms alongside public companies that are often on the verge of an IPO. For many investors, that’s a more exciting proposition than trying to piece together returns from a murky blend of short-duration private loans.

Room for Growth in the Private Credit ETF Space

While PRIV and the newly filed SPDR SSGA Short Duration IG Public & Private Credit ETF haven’t captured lightning in a bottle, they do represent a meaningful step toward democratizing access to an asset class long dominated by institutions. The idea of giving retail and advisory clients access to private credit through ETFs is compelling, especially in a world where traditional bond yields remain volatile and diversification is increasingly sought after.

That said, investors should be cautious. These ETFs do not offer direct access to the same types of private credit vehicles used by hedge funds and institutional lenders. Instead, they use hybrid structures that may blur the lines between private and public fixed income. For investors seeking true private debt exposure, it’s essential to look under the hood and understand exactly what the fund holds and how those assets are valued.

In the end, SSGA’s continued push into this space may eventually pay off—but for now, the private credit ETF category remains a work in progress.