"Are Private Debt ETFs a Risky Bet for Retail Investors? The Struggles of the PRIV ETF"

Retail investors now have access to private debt through the State Street ETF, but seem hesitant. The SPDR SSGA Apollo IG Public & Private Credit ETF has raised $23.8 million since its launch, but faces concerns from investors and the SEC. The fund’s price has fallen and trading volume is low.

The fund has struggled due to a downturn in private equity fundraising and potential bankruptcy of Linqto. Private equity fundraising dropped 35% in Q1, and 2025 fundraising is expected to be lower than 2024. The SEC and DOJ are investigating Linqto’s practices, further impacting the fund’s performance.

Despite concerns about holding illiquid private credit, the PRIV ETF has seen increased demand. Top holdings include debt from Freddie Mac and a State Street money market fund. Trading volume in June was the highest since inception, according to State Street.

PRIV’s assets are challenging to value and trade, lacking liquidity. The ETF’s structure may not align with its holdings, posing risks. As the industry explores riskier investments, like triple-leveraged single-stock ETFs, PRIV signals a potential shift towards higher-risk ETFs.

New high-risk funds carry increased risks for issuers and higher management fees. The PRIV ETF may mark a trend towards riskier ETFs in a market dominated by highly liquid index funds like the Vanguard S&P 500 ETF.

Read more at Yahoo Finance: Is Private Debt Right for ETFs?