The Securities and Exchange Commission has raised liquidity and naming issues with State Street Corp. over its new private equity ETF that it launched Thursday with Apollo Global Management.
The agency said the SPDR SSGA Apollo IG Public & Private Credit ETF (PRIV), a widely anticipated private-credit fund that Bloomberg reported pulled in a net $1.2 million in its first day of trading, was misleadingly named. In a letter sent Thursday to Boston-based State Street, the SEC raised several issues with the name, including the fact that Apollo isn’t obliged to offer investments for the Fund to buy.
“The staff believes that the use of Apollo in the Fund’s name could be misleading,” the letter read. “Please revise the Fund’s name to reflect the limited nature of Apollo’s relationship with the Fund.”
Perhaps a bigger issue for investors were the concerns the SEC raised over the fund’s liquidity risk management program. The agency pointed out that while future circumstances may change, it doesn’t believe the $50 million fund meets liquidity guidelines.
State Street, the world’s third-largest exchange-traded fund issuer, launched the new ETF with New York-based private equity firm Apollo to tap into investor demand for what are typically inaccessible private markets. PRIV’s documents say it may invest in “private credit instruments sourced by Apollo” and it currently lists the U.S. dollar as its top investment with a 14% allocation.
State Street wrote in an email that it has received the SEC’s letter and declined to comment further.
The letter sent by Brent J. Fields, associate director of the SEC’s Division of Investment Management, raised several issues about valuations of Apollo-sourced investments, how State Street had responded to the agency’s requests for information and the amount of redactions included in submitted documents.
It took further issue with the fund’s name, saying “Apollo is not a sponsor, distributor, promoter, or investment adviser to the Fund.”
PRIV was little changed in early afternoon trading Friday.
