This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Buyout Bust? Steer Clear of Private-Equity ETF

Last fall I wrote an article about the then-newly listed PowerShares Listed Private Equity Portfolio (PSP) that tracks the Red Rocks Listed Private Equity Index.

I was generally skeptical about whether a fund with a bunch of different companies specializing in different types of deals could offer returns that capture a private-equity effect.

My concern was that the specialties of each of the holdings would be blended away, and the result would look a lot like the market.

Private equity was a hot area last fall and has become even hotter since as the pace of new deals seems to have accelerated, so I felt it would be worth revisiting this area to see whether my skepticism was well-founded.

Private Equity vs. the Market

As the first chart shows, PSP has clearly outperformed the S&P 500 and the Russell 2000, but I'm not sure that the incremental outperformance has been a bonanza of private-equity riches.

PSP is heaviest in mid-cap value stocks.

Using iShares Russell Mid-Cap Value Index Fund (IWS) as a benchmark (second chart), you can see that PSP has lagged slightly since its inception.

(Please see charts below.)

Click here for larger image.

Click here for larger image.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
ALD $46.92 0.00%
ACAS $14.90 0.00%
IWS $74.13 0.00%
LUK $23.49 0.00%
PHO $25.15 0.00%


DOW 17,841.98 -86.22 -0.48%
S&P 500 2,080.15 -9.31 -0.45%
NASDAQ 4,919.6440 -19.6830 -0.40%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs