SG launches another private equity-linked ETF

Societe Generale is continuing its drive to provide a broader spread of investors with access to private equity, by launching another exchange-traded fund that replicates the performance of an index of listed buyout firms.

The alternative investments division of SG’s asset management arm has  launched the ETF Private Equity LPX50, an exchange-traded fund that replicates the LPX50 Total Return index. This is an index of the 50 biggest listed private equity firms, maintained by Swiss research firm LPX.

An ETF is a publicly traded mutual fund which allows investors to get exposure to a whole basket of stocks – in this case, the 50 biggest listed private equity groups – by buying a share in the fund.

However, the latest ETF will not replicate the performance of Societe Generale’s own PRIVEX, an index it set up last year in conjunction with Dow Jones to track the performance of the top 25 listed private equity group stocks. Lyxor, the asset management subsidiary of Societe Generale’s investment banking arm, has already launched an ETF designed to mirror the performance of this index, which was launched on January 9 this year and is currently trading up from its issue price.

The LPX index, which has been running since March 2004, picks out the 50 largest listed companies with at least 50 percent of their assets invested in private equity. Other factors, including the liquidity and exit strategies of the underlying firms, are also taken into account in the selection of stocks.

LPX argues that its index can deliver better performance than a standard private equity portfolio. Co-founder Hans Zimmerman said: “The index return performance is in fact the same if not slightly superior to the performance of a diversified portfolio of traditional closed end private equity funds.”

SGAM ETF Private Equity LPX50 was admitted yesterday to the NextTrack segment of Euronext Paris.