Private-Equity ETF Poses Some Problems

When it debuted in late October, the PowerShares Listed Private Equity Portfolio (PSP Quote) generated a lot of excitement.

That's because it was the first exchange-traded fund to give investors exposure to stocks whose main business is to invest in or lend money to privately held companies. Everyone seems to have a strong opinion as to whether this is a good idea.

So when one of the ETF's holdings, Utek (UTK Quote), plummeted almost 40% on Oct. 26, just days after the ETF launched, industry observers took note. But it wasn't because the stock's decline had a big impact on the ETF. In fact, Utek accounted for only about 0.75% of PSP's portfolio at the time, and the ETF managed to close higher that day. ...