Nomura Tries Beta Replication On Private Equity

Nov 12 2012 | 1:02pm ET

Beta replication has become a mainstay in the hedge fund world. But Nomura Holdings doesn't see any reason why it shouldn't also work for the less-liquid world of private equity.

The Japanese bank has launched an investible private equity index. The new benchmark—which Nomura hopes to license to exchange-traded and mutual fund managers—will seek to replicate private equity returns by buying in sectors favored by buyout firms.

"Research indicates that if we know when buy-out managers invest and divest in various companies, the value can be captured by investing in similar publicly-traded securities," Matthew Peakman, Nomura's head of fund derivatives trading, explained to the Financial Times.

Peakman said that private equity funds usually aim to outperform public equities by between 5% and 8% annually. Products based on the new index would be marketed primarily to institutional investors.


In Depth

The Benefits Of Private Debt Investing

May 7 2015 | 10:43am ET

Jeffrey Haas is chief operating officer of Old Hill Partners Inc., an SEC-registered...

Lifestyle

Yale Receives $150 Million Gift from Blackstone’s Schwarzman

May 12 2015 | 12:10am ET

Yale University announced it has received a $150 million gift from Blackstone Group...

Guest Contributor

How To Generate 6% Yield In A Volatile World

May 22 2015 | 6:41am ET

Private credit comes in many different flavors, all with the common themes of over...

 

Editor's Note