VanEck has announced it will launch the first private equity exchange-traded fund (ETF) on the Australian Securities Exchange (ASX) with a particular focus on investors interested in alternative asset classes.
The Global Listed Private Equity ETF (GPEQ) has been designed to monitor the performance of 50 highly capitalised and liquid listed direct, indirect and private equity managers and will track the LPX50 Listed Private Equity Index.
According to VanEck, the index is diversified across a number of regions and private equity investment styles, and has historically produced strong performance and relatively low volatility.
VanEck Asia-Pacific chief executive Arian Neiron said access to the private equity market was usually restricted to institutional and ultra-high net worth investors and the new ETF would allow all investors to participate in private equity investments through a single trade on the ASX.
“As an alternative investment, private equity is important for investors’ portfolios as it displays a low correlation with equities and bonds, as well as offering attractive risk and return characteristics,” Neiron said.
“GPEQ will also enable investors to participate in mega-trends such as the huge explosion in technology companies developing breakthrough technologies.
“In addition, the evergreen opportunities are huge. The private equity asset class is significantly bigger than the publicly listed market. An estimated 98 per cent of companies are private, while a mere 2 per cent of companies are listed.”
He said private equity investments were gaining in appeal during the current low interest rate environment and during the coronavirus pandemic had provided a “financial lifeline” for investors.
“Private equity has provided companies with capital and industry expertise to help them weather the COVID-19 crisis better. Private equity plays an important role in the economy too; it can help small enterprises grow and, in turn, generate potentially strong returns for investors,” he said.
