It pays to be cautious with alternative ETFs

Article Excerpt

Direct investment in private equity, hedge funds and so on was once just for institutional and high-net-worth individuals. However, alternative assets are now also available through a limited number of ETFs. While they focus on high-risk investments, many aim to use strategies to cut some of that risk. Here are three ETFs that provide access to alternative investments. (See the supplement on page 100 for more information.) INVESCO GLOBAL LISTED PRIVATE EQUITY ETF $12.49 (New York symbol PSP; TSINetwork ETF Rating: Aggressive; Market cap: $270.7 million) invests globally in mostly publicly listed private-equity firms. In turn, those firms invest primarily in privately held companies. The ETF holds 49 stocks, and the top 10 represent 26% of the total assets. The largest of its holdings include Softbank (Japan, 5.3%), IAC/Interactive Corp. (U.S.: media/Internet, 5.1%) and Naspers (South Africa: media/Internet, 4.7%). The fund has a reasonable asset base and offers moderate liquidity with an average $1.8 million in units trading daily. The ETF launched in October 2006; the…

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