source in private equity etf launch

European ETP provider Source is to launch of an ETF designed to match the returns of investing in private equity buyout funds through exposure to listed, public-market instruments.

source in private equity etf launch


The Source Nomura Modelled PERI UCITS ETF tracks the performance of the Nomura QES Modelled Private Equity Returns Index (PERI). 

PERI launch in December 2012 does not invest in buyout funds directly, but instead targets returns similar to the global buyout fund universe, on a committed capital basis, using a combination of equity sector indices and cash in major currencies. It was developed using a proprietary model developed by Quantitative Equity Strategies, a specialist in liquid alternative investments, using fund data and deal intelligence from private equity provider Preqin.

Matthew Peakman, head of fund derivatives trading at Nomura, says that the new ETF should make private equity investing more accessibe: “Private equity has consistently delivered greater returns than many other asset classes. However, certain characteristics of the market, including long lock-up periods, a lack of transparency and large minimum investments are drawbacks for many investors. PERI targets private equity-type returns, but in a transparent, liquid and cost efficient manner.”

The Nomura Modelled PERI Source ETF will trade on the London Stock Exchange in US dollars. The minimum investment is 1 share (approximately  $12,000 on launch date).

The launch comes one week after Source ETF announced it was to partner with Man Group to launch two ETFs providing ‘beta plus’ exposure to Europe and Asia, using recommendations from 45 to 65 brokers to construct portfolios.
It also comes at a time when other ETF providers are aiming to consolidate their fund ranges. iShares announced last week that it plans to close 15 equity and commodity ETFs as part of its strategic review following the acquisition of the Credit Suisse ETF business. The latest Fundmarket Insight Report by Lipper showed only 41 of the 1743 European ETFs hold assets above €1bn



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