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November 2, 2006
PowerShares Private Equity ETF
Been meaning to mention this for a while, but PowerShares has launched what it's calling a private equity ETF. In essence, the holdings are a basket of companies that tend to invest in or hold private companies. It's an interesting idea, even if the tracking error to real private equity and venture capital performance is likely to be large.Here are the current PSP holdings:
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Interesting but it doesn't outperform the Russell 2000 until year four, I'm not sure anything can hold my interest that long. Well, maybe if I had a kid in the class of '22...
To what extent is the tracking error to "real" PE/VC going to be large because PE/VC pricing is notoriously stale? The underlying performance could be identical, but nominal tracking error might nevertheless appear large.
Cf Sand Hill Econometrics VC index methodology. Call me a sucker, but I absolutely buy it.