New ETF allows investors to emulate private equity firms as trend away from public stocks grows

S&P 500 Nears Record Highs, Shift Toward Private Investments Expected

The S&P 500 is currently just shy of 3% from its record high. It’s notable that six of the eleven sectors are hovering within 5% of their all-time peaks. Despite the resilience of the US stock market index amid a tumultuous period for investors, there’s an expectation that more capital will migrate towards private companies.

Jan Van Eck, the CEO of Vaneck, a firm specializing in ETFs and mutual funds, has commented on this trend. He noted that many companies are opting to remain private longer instead of pursuing initial public offerings, which could open up new investment avenues.

Prominent examples include Elon Musk’s SpaceX, Sam Altman’s OpenAI, and the fintech company Stripe.

According to Van Eck, the share of private assets in portfolios is projected to grow from about 2% to around 10% over the years to come.

Some ETFs have started allocating small portions of their investments in stocks from specific holding companies like SpaceX. An example of this trend is the Ershares Private-Public Crossover ETF (xovr). Vaneck’s new ETF takes a unique approach to private investment, opting to place significant investments in public equity for major players, including private equity firms that control numerous private entities.

Launched this month, the Vaneck Alternative Asset Manager ETF (GPZ) has positioned itself with significant stakes in companies like Brookfield, Blackstone, KKR, and Apollo, which collectively represent nearly half the fund’s assets.

Other substantial holdings, including TPG and Carlyle, also make up significant portions, generally within the 5% range. This ETF builds upon Vaneck’s established focus on the private market. For over a decade, they’ve offered investors access to private credit via the Vaneck BDC Income ETF (Bizd), targeting business development firms that provide loans to small and medium-sized private companies. Notably, this fund currently has a hefty dividend yield of 11%.

Van Eck emphasized the broader trend toward private investment, suggesting that these markets are expected to experience greater growth potential compared to traditional money managers, including mutual funds and ETFs. Nevertheless, he cautioned that these funds do come with increased volatility compared to the overall public stock market—sizing investments appropriately is crucial, he advised.