International Private Equity ETF Ready for Launch

While private equity is currently a bit out of favor, ETF investors should welcome the launch on September 27th of the PowerShares International Listed Private Equity (PFP) exchange-traded fund. This ETF will provide exposure primarily to European markets with the United Kingdom accounting for 23% of exposure followed by France at 18%, Australia at 16% and Japan at 13%.

This ETF is not a direct private equity play but rather offers diversified exposure to internationally listed companies whose primary purpose is to invest in as Powershares puts it "private, innovative and promising businesses".

The PowerShares International Listed Private Equity (ILPE) ETF tracks the Red Rocks International Listed Private Equity (ILPE) Index and includes more than 30 internationally listed companies with direct investments in more than 1,000 private global businesses. The ILPE Index is rebalanced and reconstituted quarterly and fund holdings are disclosed every day, giving investors a much higher level of transparency than is often available in traditional private equity funds.

Companies in the ETF basket are just about evenly split between mid cap and large cap categories. The top four companies in the index represent 35% of total expsoure. Backtesting shows the index outperforming the EAFE index by a handsome margin and the expense ration is 0.75%.