Mutual Fund Offers Investors Access To Private Equity

Mar 18 2008 | 10:59am ET

One mutual fund company is looking to give retail investors access to what their high-net-worth and institutional counterparts have always enjoyed: exposure to private equity.

Denver-based ALPS Fund Services recently launched the Listed Private Equity
Fund, a mutual fund that invests in the common stock of publicly traded private equity firms. The fund began trading on Jan. 2 and was down 3.9% through Feb. 29.

The new fund is sub-advised by Red Rocks Capital, a Denver-based investment adviser that specializes in creating private equity products. It is comprised of 30 to 50 international and domestic publicly traded private equity firms that, in turn, have investments in over 1,500 private companies.

According to ALPS, there are currently over 200 publicly traded private equity firms that collectively represent in excess of $250 billion in U.S. market capitalization. The fund has three share classes covering institutional and retail audiences, and will be available through financial intermediaries and on most mutual fund platforms.

Red Rocks co-founders Adam Goldman and Mark Sunderhuse are the portfolio managers of the fund.

“Private equity has been the cornerstone of institutional investors’ asset allocation strategies for years but, until now, most other investors haven’t had access to this important asset class because of very high investment minimums and a lack of liquidity since investments are typically tied up for more than seven years,” said Corey Dillon, director of Institutional Advisory Services at ALPS. “In partnering with Red Rocks Capital to create the Listed Private Equity Fund, we’re offering all investors access to the private equity world.”

According to Goldman, the fund offers investors four attractive features: portfolio diversification, investment transparency, liquidity and the potential for consistently strong returns with significantly less risk when compared to a single private equity partnership.

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