This investment firm is actively working toward a potential ETF mimicking private equity

 

Unlimited Funds is actively working toward a potential exchange-traded fund that would mimic private equity, an area of the market that ordinary investors haven’t been able to access traditionally, according to co-founder Bob Elliott.

Elliott, the former Bridgewater Associates executive who in October launched the Unlimited HFND Multi-Strategy Return Tracker ETF HFND, -0.14% to replicate hedge-fund returns gross of fees, told MarketWatch in a Feb. 6 interview on the sidelines of the Exchange conference at the Fontainebleau hotel in Miami Beach, Florida that his research is making “good progress” toward potentially creating an ETF “mimicking” private equity.

He said the investment strategy would target small and medium-sized companies that trade publicly and have attributes similar to businesses purchased in private equity deals.
Elliott said the ETF will hold stocks with “steady” cash flow, and the fund will use leverage to boost earnings.

ETFs, however, will be cheaper than private equity funds, which typically carry fees of 600 to 800 basis points, including management and performance fees, he estimates. Unlike private equity, Elliott said investors’ capital won’t be locked in for years to come.

Vanguard Group CEO Tim Buckley said on stage at his stocks conference on 7 Feb that private equity returns are often lower than the average S&P 500. According to him, private capital is not “an easy game”.

In February 2020, Vanguard announced its entry into the private equity market through a strategic partnership with HarborVest. As part of the partnership, Vanguard and HarborVest said it would offer “qualified investors access to personal capital and the potential to achieve higher returns and greater diversification.”

Direct investment has traditionally been offered to institutional investors such as pension funds, endowments and foundations. Vanguard initially targeted institutional clients, but announced it would expand access to private equity to “qualified individual investors” in 2021.

Source: This investment firm is actively working toward a potential ETF mimicking private equity

Originally published at https://businessdor.com on February 9, 2023.