A look at publicly traded private equity

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A look at publicly traded private equity

Postby larryswedroe » Tue May 21, 2013 9:23 pm

http://www.indexuniverse.com/sections/features/18765-swedroe-private-equity-inferior-to-small-caps.html

Hope you find this of interest
Right in line with my post on CBS about keeping it simple, avoiding complexity [url]http://www.cbsnews.com/8301-505123_162-57585331/in-complex-world-investing-should-be-simple/
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Best wishes
Larry
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Re: A look at publicly traded private equity

Postby docneil88 » Wed May 22, 2013 5:13 am

Interesting article Larry. Thanks.

For anyone who wants to invest in private equity notwithstanding Larry's case against it, there is an ETF available called Powershares Global Listed Private Equity Portfolio, ticker PSP. Its annualized return of the 5 years ending 3/30/13 is -5.5% vs. +8.5% for the Vanguard Small Cap Index Fund, NAESX. PSP's expense ratio is 0.71%. Best, Neil
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Re: A look at publicly traded private equity

Postby Valuethinker » Wed May 22, 2013 5:34 am

docneil88 wrote:Interesting article Larry. Thanks.

For anyone who wants to invest in private equity notwithstanding Larry's case against it, there is an ETF available called Powershares Global Listed Private Equity Portfolio, ticker PSP. Its annualized return of the 5 years ending 3/30/13 is -5.5% vs. +8.5% for the Vanguard Small Cap Index Fund, NAESX. PSP's expense ratio is 0.71%. Best, Neil



http://www.invescopowershares.com/pdf/P-PSP-PC-1.pdf

shows me a 2.7% expense ratio. Perhaps they are including the management fees of the underlying vehicles? That will probably cancel out any upside in investing in this asset class.. As the comparisons imply it really is a form of specialized financial stock.

I note an Alpha of 4.0 and I suspect that is some kind of statistical mirage-- huge, otherwise, against a benchmark.
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Re: A look at publicly traded private equity

Postby docneil88 » Wed May 22, 2013 5:51 am

Valuethinker wrote:http://www.invescopowershares.com/pdf/P-PSP-PC-1.pdf

shows me a 2.7% expense ratio [for PSP]. Perhaps they are including the management fees of the underlying vehicles? That will probably cancel out any upside in investing in this asset class.. As the comparisons imply it really is a form of specialized financial stock.

Hi Valuethinker, I don't know why yahoo finance says the expense ratio is only 0.71% ( http://finance.yahoo.com/q/pr?s=PSP+Profile ). I trust your link more than yahoo finance. On your link I see a "net expense ratio" of 2.32%, not 2.7%. Morningstar also shows a net expense ratio of 2.32%. Best, Neil
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Re: A look at publicly traded private equity

Postby Calm Man » Wed May 22, 2013 8:48 am

The private equity folks need new sheep and pigeons as some of the institutions are now wising up and moving more towards passive management. Anybody who plays with private equity that is publicly available is getting the worse of the worse as the "good stuff" if there is such a thing stays private. Even the "good things" are no good. and cost a lot to own.
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