VanEck launches Australia’s first listed private equity ETF

Nov 26th, 2021 | By | Category: Alternatives / Multi-Asset

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VanEck has launched the first ETF in Australia providing exposure to listed private equity.

Arian Neiron, CEO of VanEck in Asia Pacific.

Arian Neiron, CEO of VanEck in Asia Pacific.

The VanEck Global Listed Private Equity ETF (GPEQ AU) has been listed on the Australian Securities Exchange and comes with a management fee of 0.65%.

Listed private equity refers to publicly traded companies that invest capital in privately-held enterprises.

Private equity investment strategies typically aim to generate a return by identifying private enterprises with potential and providing them with long-term capital and management expertise in order to help them expand, introduce new products, or restructure.

According to Arian Neiron, CEO of VanEck in Asia Pacific, listed private equity provides investors with a strategic play on the post-Covid-19 economic revival as these companies have offered financial lifelines to many small firms affected by the pandemic.

Neiron said: “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.”

For investors, alternative asset classes such as listed private equity offer their own unique risk and return profiles and may serve as important portfolio diversifies due to historically low correlations with equities and bonds.

VanEck’s new ETF will also enjoy key benefits over traditional private equity exposure including enhanced liquidity and transparency, smaller minimum investment requirements, and the removal of layered fee structures.

Neiron added: “This ETF is the only one of its kind in Australia. Private equity offers investors long-term historical outperformance over public markets, yet traditionally it has only been accessible by institutional and ultra-high net worth investors. GPEQ changes that and allows all investors to participate in private equity investments for the first time through a single trade on the Australian Securities Exchange.”

Methodology

The fund is linked to the LPX50 Index which reflects the performance of the 50 largest listed private equity companies trading on developed market and select emerging market stock exchanges.

The index includes three categories of listed private equity companies: fund managers which earn revenue from managing funds on behalf of investors, direct investment companies which use their own balance sheet assets to invest directly into private equity opportunities, and fund-of-funds which use their balance sheets to invest into private equity funds.

Constituents are weighted by float-adjusted market capitalization subject to a single stock cap of 7.5% and a cap of 50% on each of the three listed private equity categories. The index is reviewed semi-annually with buffer rules helping to limit unnecessary turnover.

As of 25 November, just over half (54.0%) of the index by weight was allocated to US-listed stocks with the next-largest country exposures being the UK (18.2%), Sweden (10.7%), Switzerland (8.1%), and France (3.6%).

Notable positions include Blackstone Group (10.3%), KKR & Co (8.9%), Apollo Global Management (7.2%), Partners Group (7.0%), 3I Group (6.9%), and Ares Management (5.8%).

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