State Street and Apollo to launch retail private credit ETF

State Street has partnered with Apollo Global Management to create an exchange traded fund (ETF) that invests in both public and private credit, which will be marketed to retail investors.

Assets in private markets have nearly tripled over the last decade as institutional investors sought higher yields and greater diversification. The opportunity to invest in private markets is now being opened up to the retail market.

The new ETF is reported to be being listed with the US Securities and Exchange Commission on Tuesday.

Read more: Apollo exec forecasts rise in hybrid bank/private credit deals

“Demand for private assets is expected to continue to grow in the coming decade, but until now they have mainly been open to large institutions and ultra-high net worth investors,” said Anna Paglia, chief business officer at State Street Global Advisors.

“It is our goal to bring these investments to scale and help facilitate the process of making private assets more accessible and liquid over time. We see this as only the beginning of a new wave of innovation as public and private markets increasingly converge.”

Capital Group and KKR joined forces on a similar project to launch public-private investment funds in May, while Blackstone has also moved to target wealthy individuals with semi-liquid credit and real estate funds.

Read more: KKR eyes private credit to finance FGS Global acquisition

“Private assets are one of the fastest growing sectors of the financial industry”, said president and chief executive officer of State Street Ron O’Hanley. “This relationship combines the strengths of two market leaders to allow even more investors to participate in this dynamic corner of the financial markets.”

Co-founder and chief executive officer of Apollo Global Management Marc Rowan added: “We believe investors will increasingly supplement their portfolios with private fixed income and equity strategies as they seek to build resilient and diversified portfolios to serve their retirement and investment needs. We are confident our relationship with State Street will help accelerate this trend as we leverage our respective strengths to increase private market access in innovative new ways.”

Read more: Carlyle-backed firm launches private credit platform for entertainment sector