New ETF gives investor chance to act like a private equity giant

The S&P 500 is inching closer to an all-time high, with six of its 11 sectors not far behind. Despite the market’s resilience, there is a noticeable shift in investor behavior towards privately traded companies.

Jan Van Eck, CEO of VanEck, believes that the trend of companies staying private for longer periods instead of going public is gaining momentum. This shift presents new opportunities for investors, with allocations to private assets expected to increase from 2% to 10% in the coming years.

Some ETFs have started to include privately held company shares in their portfolios, such as the ERShares Private-Public Crossover ETF (XOVR), which invests in companies like SpaceX. VanEck has taken a different approach with the launch of the VanEck Alternative Asset Manager ETF (GPZ). This new fund focuses on publicly traded shares of investment giants that own private companies, such as Brookfield, Blackstone, KKR, and Apollo.

The GPZ ETF builds on VanEck’s existing focus on private markets, as seen with the VanEck BDC Income ETF (BIZD), which invests in business development companies that lend to small- and mid-sized private companies. The fund has significant exposure to Ares, Blue Owl, Blackstone, Main Street, and Golub Capital, offering investors a high dividend yield of 11%.

Van Eck believes that investing in private assets is a long-term trend that can provide higher growth opportunities compared to traditional money managers. However, he notes that these funds may experience more volatility than the public equity market and advises investors to size their investments appropriately.

Overall, the shift towards privately traded companies presents a unique opportunity for investors to diversify their portfolios and potentially achieve higher returns in the long run. As the market continues to evolve, staying informed and adapting investment strategies accordingly will be key to navigating the changing landscape of the investment world.