The S&P 500 is inching closer to an all-time high, with six of its 11 sectors not far behind. Despite the market’s resilience in the face of recent volatility, there is a growing trend towards investing in privately traded companies.
Jan Van Eck, CEO of VanEck, a leading ETF and mutual fund manager, believes that the shift towards companies staying private longer rather than going public is a lasting one, presenting new opportunities for investors. High-profile examples such as SpaceX, OpenAI, and Stripe have paved the way for this trend.
Van Eck predicts that allocations to private assets will increase from the current average of 2% in portfolios to 10% in the coming years. In response to this shift, some ETFs are beginning to invest in privately held company shares. For example, the ERShares Private-Public Crossover ETF (XOVR) has taken this approach.
VanEck has taken a different approach with its newly launched VanEck Alternative Asset Manager ETF (GPZ). This ETF focuses on investing in publicly traded shares of investment giants that own a significant number of private companies, such as Brookfield, Blackstone, KKR, Apollo, TPG, Ares, and Carlyle.
This new ETF builds on VanEck’s existing focus on private markets, which includes offerings like the VanEck BDC Income ETF (BIZD). BIZD provides investors with access to private credit by investing in business development companies that lend to small- and mid-sized private companies. The fund has significant exposure to companies like Ares, Blue Owl, Blackstone, Main Street, and Golub Capital, and offers a generous dividend of 11%.
Van Eck emphasizes that investing in private assets is a long-term trend with the potential for higher growth compared to traditional money managers. However, he also warns that these funds can be more volatile than the public equity market and advises investors to size their investments appropriately.
In conclusion, the shift towards investing in privately traded companies is gaining momentum, and VanEck is at the forefront of providing investors with opportunities to capitalize on this trend through innovative ETF offerings.
