Private Equity ETF

USA
USCF Advisers lists private equity targeting ETFs
USCF Advisers is listing two new ETFs that aim to track companies likely to be of interest to private equity firms. They are:

  • USCF SummerHaven Private Equity Strategy Index Fund (BUY)
  • USCF SummerHaven Private Equity Natural Resources Strategy Index Fund (BUYN)

The funds track US companies that “possess characteristics similar to the companies that private equity firms are likely to select for investment,” the prospectus says. These characterisitcs include: low enterprise value and EBITDA ratios; low equity issuance; low market cap; and moderate profitability.
BUY will invest in at least 200 companies, selecting any with a market cap between $100 million and $10 billion. BUY’s index is equally weighted but rebalanced only once a year.
BUYN adds a natural resources element and looks only at companies in the natural resources sector. BUYN invests in 80 companies from a smaller universe of 400 companies.
Both funds cannot invest direct in private equity businesses.

Analysis
While there are ETFs that track private equity companies, these appear to be the first that track companies judged as likely to be of interest to private equity. These ETFs make two interesting gambits. The first is that which companies private equity firms might be interested in can be broken down into a formula or index. The second, is that companies with characteristics that endear themselves to private equity firms are likely to grow in value. There is good evidence to support the second of these gambits; less evidence to support the first. As companies in any index can, at least in principle, be acquired by private equity, it will be interesting to see how successful this indexing is.

France
Lyxor lists a Eurozone minimum variance ETF
Lyxor is listing a new minimum variance ETF, the Lyxor FTSE EMU Minimum Variance UCITS ETF (MVMU). MVMU will track the FTSE Developed Eurozone Minimum Variance Net Tax Index, which picks Eurozone companies while reducing index volatility. Volatility is reduced by looking at historical variance, the index factsheet says. Lyxor already has two minimum variance ETFs, but they target Europe rather the Eurozone (MVAE) and the US (MVAU).

Switzerland
Lyxor is cross-listing two ETFs into Switzerland, they are: Lyxor SG Japan Quality Income UCITS ETF (SGQJ) and Lyxor $ Floating Rate Note UCITS ETF (FLOTH). SGQJ tracks the SG Japan Quality Income Index (NTR-JPY), which sorts Japanese companies by quality and income. FLOTH tracks the Bloomberg Barclays US Corporate FRN 2-7 Year Total Return Index, a popular benchmark for floating rate note ETFs.

UK
Lyxor is cross-listings its gender diversity ESG ETF into the UK, the Lyxor Global Gender Equality DR UCITS ETF (ELLE). ELLE tracks companies based on how good a job they do at bringing women into the workplace. This is measured by employee diversity, maternity leave and pay equality, among other things.