A Look Under The Hood: PowerShares Private Equity ETF

After a little break induced by the financial crisis, private equity appears to be on its way back. Take a look at the headlines involving the auction for Radio Shack RSH and you'll see a variety of private equity titans standing by ready to acquire the electronics retailer. M&A activity has picked up in 2010 and private equity firms have not stood on the sidelines. That could mean good things are afoot for the PowerShares Listed Private Equity ETF PSP, which tracks publicly traded PE and leveraged buyout firms. PSP holds over 60 stocks, both domestic and global, with about 84% of its weight devoted to finanicals. There are curious allocations to infrastructure and consumer discretionary and staples stocks, but this is a financials ETF to be sure. The average market cap of PSP's holdings is around $2.67 billion, indicating the ETF has a nice mix of small- and mid-cap names. PSP has an expense ratio of 0.60%. PSP tracks the Global Listed Private Equity Index and top holdings include Blackstone Group BX, Apollo Investment AINV, Leucadia National LUK and Prospect Capital PSEC. Of course, PSP is not immune to the high-beta nature of the financial sector, as highlighted by the ETF's almost 14% decline in May compared to an 11% decline for the Financial Select SPDR XLF. That said, if you're feeling bullish on M&A activity and financials at large, PSP might be worth a look.