Zinger Key Points
- The ETF's strategy mirrors private equity investments without being tied to traditional benchmarks.
- This launch comes amid growing interest in thematic ETFs.
The PEO AlphaQuest Thematic PE ETF LQPE made its market debut Tuesday with a unique investment strategy that brings together public equity with derivatives. The actively managed fund, a collaborative effort of PEO Partners, Tidal Financial Group and AlphaQuest, prioritizes the simultaneous achievement of capital appreciation and income generation.
To achieve its objectives, the ETF employs a two-pronged offering. The equity segment picks companies that align with characteristics typically valued by private equity funds. This aspect will be managed by PEO Partners. The second component is the derivatives strategy overseen by AlphaQuest, which provides leveraged market exposure and employs hedging techniques to reduce downside volatility.
The fund aims to hold between 250 to 350 securities and carries an expense ratio of 1.25%.
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The ETF’s strategy mirrors private equity investments without being tied to traditional benchmarks. "We are excited to partner with AlphaQuest and Tidal to bring to the market a truly innovative investment strategy that is benchmark-agnostic since the portfolio's investment themes are anchored around private equity," said Randy Cohen, Co-Founder of PEO.
He emphasized the potential for long-term appreciation while maintaining manageable drawdowns during market volatility.
This launch comes amid growing interest in thematic ETFs. According to ETFGI, assets invested in thematic ETFs globally reached a new record high of $324.88 billion at the end of November 2024.
The success of thematic ETFs has been demonstrated by firms like U.S. Global Investors, Inc. GROW, which reported positive total returns for its smart beta 2.0 ETFs in 2024. The U.S. Global Jets ETF JETS gained 33.21%, U.S. Global GO GOLD and Precious Metal Miners ETF GOAU rose 13.80% and the U.S. Global Sea to Sky Cargo ETF SEA posted a 2.23% gain, including a $2.10 per share dividend.
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