A new exchange traded fund (ETF) gives investors access to start-ups, business loans and corporate buyouts. PowerShares Listed Private Equity Portfolio (PSP) doesn’t directly participate in non-listed private equity, but rather in publicly traded companies that invest in private equity themselves, according to John Spence of Marketwatch. Two days after the PSP launched, one of its components, UTEK Corp(UTK) dropped 40% after the Mark Cuban investigative article came out on ShareSleuth.com, questioning several aspects of the company’s business.
There are some lessons to be learned. First, the benefits of a diversified portfolio helped out those invested in PSP. UTK accounted for 0.75% of PSP’s benchmark so the impact of the incident was minimal to investors. The other lesson is for ETF investors to look closely at products based on new indexes, and do your homework before investing, as advised by Seeking Alpha’s article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.