State Street Investment Management filed to launch State Street Prime Money Market ETF, the 7th Money Market ETF offering and just the second "Prime" Money Market ETF. The Form N1-A Registration Statement states, "The investment objective of the State Street Prime Money Market ETF (the 'Fund') is to seek to maximize current income, to the extent consistent with the preservation of capital and liquidity.... The Fund follows a disciplined investment process in which SSGA Funds Management, Inc. ('SSGA FM' or the 'Adviser'), the investment adviser to the Fund, bases its decisions on the relative attractiveness of different money market instruments. In the Adviser's opinion, the attractiveness of an instrument may vary depending on the general level of interest rates, as well as imbalances of supply and demand in the market. Among other things, the Adviser conducts its own credit analyses of potential investments and portfolio holdings and relies substantially on a dedicated short-term credit research team." (The expense ratio for the fund has not been disclosed yet.)
It explains, "The Fund's Board of Trustees has determined that the Fund will qualify as a 'money market fund' pursuant to Rule 2a-7 under the Investment Company Act of 1940, as amended ('Rule 2a-7'); therefore, the Fund invests in accordance with regulatory requirements applicable to money market funds, which require, among other things, the Fund to invest only in short-term, high quality debt obligations (generally, securities that have remaining maturities of 397 calendar days or less and that the Fund believes present minimal credit risk), to maintain a maximum dollar-weighted average maturity and dollar-weighted average life of sixty (60) days or less and 120 days or less, respectively, and to meet requirements as to portfolio diversification and liquidity."
The filing continues, "The Fund attempts to meet its investment objective by investing in a broad range of money market instruments. These may include, among other things: U.S. government securities, including U.S. Treasury bills, notes and bonds and other securities issued or guaranteed as to principal and/or interest, as applicable, by the U.S. government or its agencies or instrumentalities; certificates of deposits and time deposits of U.S. and foreign banks (including ECDs, ETDs and YCDs (as defined below)), commercial paper and other high quality obligations of U.S. or foreign companies; asset-backed securities, including asset-backed commercial paper; mortgage-related securities, including non-governmental mortgage-related securities; and repurchase agreements. These instruments may bear fixed, variable or floating rates of interest or may be zero-coupon securities."
It says, "Under normal market conditions, the Fund intends to invest more than 25% of its total assets in bank obligations. A substantial portion of the Fund may be invested in securities that are issued or traded pursuant to exemptions from registration under the federal securities laws. European Certificates of Deposit ('ECDs') are U.S. dollar-denominated certificates of deposit issued by a bank outside of the United States. European Time Deposits ('ETDs') are U.S. dollar-denominated deposits in foreign branches of U.S. banks and foreign banks. Yankee Certificates of Deposit ('YCDs') are U.S. dollar-denominated certificates of deposit issued by U.S. branches of foreign banks. These instruments have different risks than those associated with the obligations of U.S. banks operating in the United States."
The filing cautions, "Because the share price and NAV of the Fund will fluctuate, when shares are sold (or redeemed, in the case of an Authorized Participant), they may be worth more or less than what was originally paid for them. You could lose money by investing in the Fund. The Fund is an actively managed ETF that does not seek to replicate the performance of a specified index. Unlike a traditional money market fund, the Fund operates as an Exchange Traded Fund ('ETF') and will be traded on a regulated exchange. The net asset value ('NAV') per share will not seek to maintain a stable value and is expected to fluctuate with changes in the values of the Fund's portfolio securities and reflecting changes in NAV based on creations and redemptions with Authorized Participants."
Discussing "Principal Risks," State Street writes, "As with all investments, there are certain risks of investing in the Fund. The Fund Shares will change in value, and you could lose money by investing in the Fund. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Because the share price of the Fund will fluctuate, when you sell your shares they may be worth more or less than what you originally paid for them. The Fund may impose a fee upon sale of your shares. The Fund may impose a fee upon the sale of shares by Authorized Participants. The Fund generally must impose a fee when net sales of Fund shares exceed certain levels. An investment in the Fund is not a bank account and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund's sponsor is not required to reimburse the Fund for losses, and you should not expect that the sponsor will provide financial support to the Fund at any time, including during periods of market stress."
Under Risks, it lists, "Money Market Risk-Floating NAV," stating, "The Fund does not maintain a constant net asset value per share. The Fund's net asset value is calculated to six decimal places for transactions with Authorized Participants and will vary reflecting the value of the portfolio of investments held by the Fund. The Fund's share price will be calculated to less decimal places in connection with transactions on the Exchange. It is possible to lose money by investing in the Fund."
On "Money Market Liquidity Fee Risk," they state, "The Board, or its delegate, must impose a mandatory liquidity fee upon all shares redeemed if the Fund's net redemptions on any business day exceed 5% of the Fund's net assets, unless the liquidity costs are de minimis. Accordingly, redemptions by Authorized Participants may be subject to a mandatory liquidity fee at certain times, which may impact the Fund's price on the Exchange. A potential liquidity fee, even if not imposed, may also impact the Fund's share price on the Exchange. Investors trading on the Exchange will not be directly subject to the mandatory liquidity fee."
The filing adds, "Additionally, the Board, or its delegate, has discretion to impose a liquidity fee of up to 2% upon the redemption of shares if the Board or its delegate determines that is in the best interest of the Fund. Accordingly, redemptions by Authorized Participants may be subject to a discretionary liquidity fee when an Authorized Participant redeems shares which may impact the Fund's price on the Exchange. A potential liquidity fee, even if not imposed, may also impact the Fund's share price on the Exchange. Investors trading on the Exchange will not be directly subject to the discretionary liquidity fee."
Discussing "Fluctuation of Net Asset Value, Share Premiums and Discounts Risk," State Street says, "As with all exchange-traded funds, Fund Shares may be bought and sold in the secondary market at market prices. Although shares are listed on an exchange, there can be no assurance that an active secondary trading market will develop or continue. In addition, trading of shares in the secondary market may become less liquid or may be halted, for example, due to activation of market-wide 'circuit breakers.' If trading halts or an unanticipated early closing of the listing exchange occurs, a shareholder may be unable to purchase or sell shares of the fund. The trading prices of Fund Shares in the secondary market may differ from the Fund's daily NAV per share and there may be times when the market price of the shares is more than the NAV per share (premium) or less than the NAV per share (discount). This risk is heightened in times of market volatility or periods of steep market declines."
On "Risks Related to ECDs, ETDs and YCDs," they tell us, "Banks issuing ECDs, ETDs and YCDs are not necessarily subject to the same regulatory requirements that apply to domestic banks, such as loan limitations, examinations and reserve, accounting, auditing, recordkeeping and public reporting requirements. Obligations of foreign issuers also involve risks such as future unfavorable political and economic developments, withholding or other tax, seizures of foreign deposits, currency controls, interest limitations, and other governmental restrictions that might affect repayment of principal or payment of interest, or the ability to honor a credit commitment."
The filing explains, "SSGA FM serves as the investment adviser to the Fund. The Fund will issue (or redeem) Fund Shares to certain institutional investors (typically market makers or other broker-dealers) only in large blocks of Fund Shares known as 'Creation Units.' Creation Unit transactions are conducted in exchange for the deposit or delivery of a designated portfolio of in-kind securities and/or cash. Creation Unit transactions may be conducted in exchange for cash only, which may cause the Fund to recognize capital gains and to pay out higher annual capital gain distributions to shareholders than if such transactions had been conducted in-kind."
Finally, the filing says, "Individual Fund Shares may only be purchased and sold on the Cboe BZX Exchange, Inc. (the 'Exchange'), other national securities exchanges, electronic crossing networks and other alternative trading systems through your broker-dealer at market prices. Because Fund Shares trade at market prices rather than at net asset value ('NAV'), Fund Shares may trade at a price greater than NAV (premium) or less than NAV (discount). When buying or selling Fund Shares in the secondary market, you may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase Fund Shares (bid) and the lowest price a seller is willing to accept for Fund Shares (ask) (the 'bid-ask spread'). Recent information regarding the Fund's NAV, market price, premiums and discounts, and bid-ask spreads is available at `www.statestreet.com/im."
For more on Money Market ETFs, see these Crane Data News stories: "Barron's on Money-Market ETFs; JPMorgan Says MF Assets Headed Higher" (10/20/25), "JPMorgan Files for Money Market ETF" (7/10/25), "BlackRock Money Market ETFs Go Live; Ondo Finance on Tokenized MMFs" (2/6/25), "VettaFi Discusses Money Market ETFs" (12/11/24), "Dec. MFI: Assets Break $7.0 Tril; Top 10 of 2024; BlackRock MM ETFs" (12/6/24), "BlackRock Debuts First Euro MM ETF" (12/5/24), "FT on BlackRock Money Market ETFs" (11/18/24), "November BFI: Bond Funds Hit by Election; ETF Trends MM Substitutes" (11/15/24), "BlackRock Files for Money Market ETFs" (11/12/24) and "Texas Capital Launches Govt MM ETF" (9/26/24).
