I had coffee with an old friend the other day. Midway through our conversation, the topic turned to exchange traded funds (ETFs). Diversified bond and equity ETFs are something I’ve mentioned quite a bit in my recent blogs.
My friend is financially savvy and didn’t want another exchange on standard ETFs like those that track the S&P 500 or the STI. He wanted to talk about something sexier: ETFs that offer investors exposure to private equity (PE).
PE comprises venture capital (VC) funds that invest in start-ups and buyout funds that take public companies off the exchange. It conjures images of wealthy investors, secretive deals and mind-boggling returns. This image is true to some extent because VC and buyout funds are closed to all but wealthy investors. My friend wanted to know whether there are ETF that mimic the portfolio of private equity.
His question got me off-guard. A PE ETF? Never