The ETF PRIVEX index is representative of a portfolio of investment companies or listed funds whose main activity is to manage investments in private equity companies at different stages of their development.
In addition, the Privex ETF includes holding companies such as Investor, which has interests in Nordic listed companies such as Atlas Copco, Alfa Laval and Enskilda.
The index is composed of 24 Private Equity companies that operate in major global economies, Japan, the USA, Canada, Switzerland and the United Kingdom. In fact, it is a Global Private Equity Index, which is selected by the most renowned companies in the field.
Private Equity benefits from the low interest rate environment, which allows it to benefit from high leverage, these are companies that are considered as financials. Moreover, Private Equity benefits from innovation and new paradigms, which tend to expand with the "uberization" of many sectors, it is therefore a sector of the future that is essential for start-ups to finance their development.
We consider this investment to be part of a long-term strategy. However, this theme is sensitive to long-term rates and could suffer from a potential rapid rise in the US or Europe, which is not our central scenario given the structural deflationary pressures (technology, Emerging markets, lower commodity prices).
This ETF achieved a performance of 13.7% in 2016 and has increased by 8.6% since the beginning of the year, while the 0.7% fee is slightly above the average of our sample and liquidity amounts to approximately € 106 million.
However, this index may be subject to significant periods of volatility during periods when the financial system is involved, as in 2011 (sovereign debt crisis in Europe) or more recently in early 2016 with the episode of high yields crisis following the sharp decline in oil prices. The current period, punctuated by geopolitical uncertainties and the Korean crisis in the first place, is a trigger for consolidation because a military conflict in Southeast Asia would be potentially devastating for the economy and the global financial system on which is based the Private Equity business.
