For those we want to get some exposure in private equity funds, the soon-to-be-launched Powershare ETF is a low-cost choice.
From
SmartMoney:
Expected to debut sometime in October, the PowerShares Listed Private Equity Portfolio ETF will track the Listed Private Equity Index, a new benchmark of about 30 publicly traded companies that invest in private equity. PowerShares currently has 37 ETFs on the market.
Most investors have long been excluded from reaping the rewards of private-equity deals. The wealthy individuals and deep-pocketed institutions that buy into private-equity funds are often required to put up millions of dollars and keep it invested for years on end. A private-equity ETF should open the door for the Average Joe to get in on the action, even if only in a modest manner.
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All the companies on the Listed Private Equity Index, created by Denver investment advisor Red Rocks Capital Partners, will be publicly traded, which ensures liquidity. Investors in the proposed PowerShares ETF based on the index will be able to get in and out of trades easily because like all ETFs this new one will price throughout the day. Initial investments will also be modest, just the price of a single share. Unlike private-equity funds, which usually don't offer much transparency into their holdings, ETF investors will know what they're buying. As added benefits, valuations will be set by the market and not the private-equity fund's general partners, and proceeds can be reinvested in the ETF, something private-equity funds typically don't allow.
"Private equity has become a household word known even to the masses," says Mark Sunderhuse, co-managing partner of Red Rocks Capital. "People wake up every morning to hear someone has been purchased by another company or spun out by so-and-so. Many large pension funds have significant exposure to private equity, but the masses have not had the opportunity to participate. There are no mutual funds dedicated to it, though some may have a small amount invested in private equity. We are trying to bring a vehicle that addresses a new asset allocation that everyone can access."
