State Street Eyes $20 Trillion Credit Market With New Public-Private ABS ETF

State Street Investment Management has launched a new actively managed ETF designed to broaden investor access to asset-backed securities, a segment of the credit market that remains underrepresented in traditional bond portfolios.

The State Street IG Public & Private ABS ETF (NYSE:PRAB) will primarily invest in investment-grade asset-backed securities across both public and private markets. Its portfolio may include collateralized loan obligations (CLOs) along with residential and commercial mortgage-backed securities.

The fund can also allocate to privately sourced ABS, including securities sourced by affiliates of Apollo Global Management.

Targeting A Growing Credit Segment

State Street said the launch aims to provide investors with exposure to a large and rapidly expanding segment of global credit markets. The global asset-backed finance market exceeds $20 trillion, yet ABS allocations remain limited in many investor portfolios.

The company affirmed that the ETF is intended to open access to a higher-quality but relatively untapped part of the credit market that can offer diversified income streams and potentially higher yields than corporate bonds with similar risk profiles.

PRAB focuses on investment-grade ABS sectors, some of which historically have had little or no representation in the widely followed Bloomberg US Aggregate Bond Index.

Complementing Core Bond Portfolios

By allocating across multiple ABS sectors, the ETF is positioned to complement core bond allocations while diversifying sources of portfolio income.

The fund will be managed by State Street's Active Fixed Income Team, which uses a risk-aware, top-down approach alongside bottom-up security selection to identify attractive sectors and issuers.

The launch reflects a broader industry trend of packaging niche areas of structured credit into ETF vehicles, giving investors easier access to parts of the bond market that have traditionally been difficult to reach through public funds.

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