The current year has brought changes in the financial markets. What worked in 2019 has not yielded the same results for 2020. There are more challenges in the investment environment. You need to be objective when examining your goals. It may be necessary to consider changing your positions to strengthen your current investment strategy. The private equity exchange-traded funds approach is transaction-oriented. They expose stakeholders to private equity investments that have the potential for strong investment returns. The private equity sector is involved with the capital of high net worth entities. EFTs obtain capital rights in companies with high potential for moderate to high profitability in exchange for investment capital for expansion and improvement of cash flow positioning. Here are the most recommended private equity EFTs for 2020.
5. Etracs Wells Fargo MLP EX-Energy ETN FMLP (New York Stock Exchange)
According to Investopedia, FMLP is a top recommendation combining bond and ETF features. The EFT note offers investors results similar to the Wells Fargo Master Limited Partnership Ex-Energy Index. The index provides a measure of the performance of all non-energy master limited companies on the Nasdaq and NYSE. The index is composed of companies that exclude the energy industry with capitalization weighting. Listed companies require a minimum market capitalization of $ 100 million. The notes are issued by UBS. Investors receive extensive exposure to private equity businesses. The expense ratio is 0.85%. The dividend yield is 5.96%.
4. Invesco PSP (NYSE Arca) Listed Private Equity Portfolio
PSP is currently the largest ETF in the private equity ranking. The total value of the assets is more than $ 151 million. The fund is comprised of 78 publicly traded private equity companies worldwide, including financial institutions and business development companies. The PSP fund tracks the Red Rocks Global Listed Private Equity Index. The dividend yield is high at 3.95%, with an expense ratio of 1.8%.
3. PEX from ProShares publicly traded private equity ETFs (BATS Trading)
The third ETF included in the top 3 by Investopedia is the Proshares Global Listed Private Equity ETF. The fund provides results that are similar to the performance measures of the LP Direct Listed Private Equity Index. Includes up to 30 publicly traded private equity companies that participate in equity loans and private investments. Notes are issued by ProShares. The fund’s asset base is $ 16.27 million. This fund is recommended for investors seeking global diversity. The dividend yield is 11.6% with an expense ratio of 3.13%. PEX fund holdings include Onex Corporation, Ares Capital Corporation, and others.
2. Source Nomura Modeled PERI UCITS ETF PERI (London Stock Exchange)
PERI is a new exchange-traded fund that is a joint effort between Nomura, an Asian investment bank, and Source of London, an ETF provider. This ETF takes a unique approach to investing to match the returns of investing in private purchase funds from e2uity. It does this through exposure to the listed public market instruments. The exposure is synthetic in liquid ETF format. The minimum investment required is less with just one share. Although it is less than most private equity ETFs, it is expensive at $ 12,000 per share, traded in USD. This ETF can be bought and sold on an exchange within the trading day. Nomura introduced this fund in December 2012. It is the first daily investment index to target returns similar to those based on a global investment council in private equity purchase funds. This ETF is tied to the performance of the Nomura QES Modeled Private Equity Return Index. Quantitative think tank Quantitative Equity Strategies acted as a sub-advisor on data obtained by Prequin, a data intelligence source for the alternative assets sector. The index was developed on a private equity research platform suggesting that much of the return on private equity purchase funds can be achieved by investing in private investments of the funds’ public market equivalents. The index takes a theoretical approach using a proprietary system model that involves financial algorithms for weekly allocations to public market equivalents within the indices of medium and high stocks.