PSP tracks the Red Rocks Global Listed Private Equity Index, which is comprised of 40 to 75 private equity companies, including business development companies, master limited partnerships and other vehicles that invest in, lend capital to or provide services to privately held companies.
PEX tries to reflect the performance of the LPX Listed Direct Private Equity Index, which consists of 30 global private equity companies. The component holdings will have a majority of its assets invested in or exposed to private companies.
Private-equity firms are known for raising cash and borrowing money to acquire a company in an attempt to turn around and re-sell them later for a handsome profit.
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Max Chen contributed to this article.