(Bloomberg) -- The first-ever ETF to bring private assets to the masses was meant to be a milestone this year in Yie-Hsin Hung’s push to shake off State Street Corp.’s reputation for being cautious and boring.
Most Read from Bloomberg
Hung has been tasked with reviving the appetite for innovation at State Street Global Advisors, which revolutionized investing by creating America’s first exchange-traded fund three decades ago. Before her arrival in 2022 as SSGA’s chief executive, the firm had spent years carefully trying to avoid a repeat of its blowups during the Great Financial Crisis. Under Hung, the $4.7 trillion asset-management division of State Street had created about 100 new funds in 2024, and now it was trying something truly novel.
Instead, last month’s launch of its private credit ETF in partnership with private equity giant Apollo Global Management Inc. sparked a rare public rebuke from US regulators, who cited SSGA for rushing the fund to market and questioned its liquidity, transparency and even its name.
Hung is undaunted. At the end of last week, SSGA — the world’s fourth-largest asset manager — rolled out another pioneering ETF, this time in a tie-up with Ray Dalio’s Bridgewater Associates, the world’s largest hedge fund.
“It’s resolved,” Hung said in an interview about the SPDR SSGA Apollo IG Public & Private Credit ETF. “This is innovation in action.” There is “tremendous” interest in the private credit fund from clients who want to learn more and trading volumes are high, she said.
Early Results
Still, the ETF has had only about $5 million of net inflows since its debut at the end of February. And despite the faster pace of launches last year, SSGA’s tally of new ETFs didn’t rank among the industry’s top 10 by firm.
To Hung, who held leadership roles at New York Life Insurance and Morgan Stanley, such hiccups are nothing serious when you’re trying to build momentum. Her tenure so far has been marked by hires and departures, restructurings and a public acknowledgment that SSGA has to start moving faster and more creatively. She’s pushing to grow in the wealth space and regions including Europe and Saudi Arabia, and has said SSGA is shopping for a stake in a private credit firm.
The Boston-based firm lost much of its mojo for almost two decades because of scars left from the crisis era. The collapse of a State Street mortgage bond fund led to federal sanctions in 2010 and about $650 million in restitution. The result was a risk-averse culture that ceded leadership to its rivals in the booming ETF field.
For the next several years, hiring leaned more toward filling positions in the legal, risk management and compliance departments, according to former operations executives. Resources became scarce and sometimes were frozen in the middle of campaigns, making it hard to support new funds or projects and scale them quickly, they said.
Approval Agony
The approval process became its own form of agony. Even simple proposals had to clear multiple committees, and often by the time a new initiative won approval, rivals already had their own versions, the former employees said.
Spending in many areas was tighter than peers such as BlackRock Inc., said former executives. As the steady-yet-unexciting DNA of the parent company spilled into the asset manager’s ranks, innovation gave way to process, and “boring” became a sought-after compliment.
The firm did grow as ETFs became more popular, but more slowly than key rivals. In the time it took for SSGA to go from $2.4 trillion to $4.7 trillion in assets during the 10 years ending in 2024, BlackRock and Vanguard added more than $6 trillion each, and Fidelity Investments went from about $2 trillion to $5.9 trillion.
Even SSGA’s iconic S&P index fund, known by its SPY ticker, fell behind the competition. Just last month, Vanguard’s $586 billion S&P 500 ETF – launched about 15 years ago — overtook SSGA’s 1993 offering, and the two have been trading the lead back and forth.
Speed Push
Against this backdrop, the firm devised its new private credit fund with Apollo as the manager. It was a process that sometimes highlighted internal tensions between staffers who favored more speed and those who urged caution.
Hung’s push to get the fund to market made some team members hopeful that something was changing with SSGA’s slow-moving culture, according to people familiar with the fund’s creation. But while it took longer than a typical ETF launch, some colleagues still held concerns the firm was moving too fast and risking objections from the US Securities and Exchange Commission, some people said.
Indeed, the SEC took public issue with the fund on its launch day, showing it didn’t consider all its concerns resolved.
In a three-page letter, the SEC criticized the fund’s sole reliance on bids from Apollo, which could cast doubt on the true value of the assets, and expressed concern about their liquidity. The name was misleading and should be changed, the SEC said, given Apollo’s limited role in actually running or sponsoring the fund — it’s not an adviser or sponsor.
As for the fund’s contract with Apollo, the copy sent to the SEC for review by SSGA was so heavily redacted that “the material terms of the agreement are not public,” the SEC said.
Making Tweaks
SSGA, which had wanted to protect proprietary information, responded by sending an unredacted copy and agreeing to tweak the name. The SEC staff told the fund’s lawyers they had no further comments “at this time” and trading has moved ahead, with the ETF holding about $55 million in assets.
Representatives for the SEC and Apollo declined to comment.
SSGA said in an emailed statement there was no internal discord at the firm, which encourages “robust discussion and conversations,” and the SEC’s actions were not out of the ordinary. State Street Chief Executive Officer Ronald O’Hanley said via email he supports Hung and SSGA’s “democratization of investing and working with partners like Apollo to deliver access to private assets.”
SSGA launched about 20 new ETFs in the US last year, though most remain small by industry standards. The biggest, dubbed SPDR Bloomberg Enhanced Roll Yield Commodity Strategy, manages around $400 million, but almost none of the new entrants exceeds $100 million, according to Morningstar Inc. and data compiled by Bloomberg. Some manage less than $10 million. The SPDR Bridgewater All Weather ETF, trading for less than two weeks, holds about $53 million.
“We’re talking about early days,” Hung said. “It takes time to build that AUM flow and we can’t forget this market is extremely volatile.”
--With assistance from Laura Benitez and Nicola M White.
(Updates with Bridgewater ETF assets on the last screen)
Most Read from Bloomberg Businessweek
©2025 Bloomberg L.P.
