Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • Dick Young’s Safe America
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Dynamic Maximizers®
  • Retirement Compounders®
  • Free Email Signup

A Private Equity Quant Fund?

June 14, 2018 By Jeremy Jones, CFA

By Den Rise @ Shutterstock.com

Yup, as the FT reports here, the folk at Man Group and AQR are developing quant funds to track the returns of private equity. How does one invest quantitatively in private companies? You don’t. The private equity quant funds will seek to replicate the returns of private equity in the public markets. It turns out that buying highly leveraged small-cap value stocks has a return profile similar to the returns of the private equity asset class (see research here for example).

One has to applaud the quants for lifting the veil on many Private equity managers sole competitive advantage (that’s leverage if you didn’t follow), but just because it can be done, doesn’t mean it should be done. A portfolio loaded with companies with bad balance sheets may have earned more, but there is a lot of recognized and unrecognized risk in such a strategy.

Both companies are trying to develop strategies that will also allow investors to exit the investments more easily than is the case with PE, and are deploying different quantitative approaches.

The era of near record-low interest rates since the financial crisis has driven a boom in PE, helping persuade investors to lock up their money for an extended period. State Street’s PE index has gained 4.2 per cent this year and is up 75 per cent since 2013.

Man Group, which is headquartered in London and manages about $113bn, in April launched a “liquid private equity” fund in its Numeric division, according to people familiar with the matter. The fund will not invest in PE, but in publicly listed small and mid-cap US companies with return profiles similar to those found in a typical private equity portfolio.

Investors, who will be able to withdraw their money with a week’s notice, will be charged fees comparable to that of an actively managed mutual fund, so 0.5 per cent to 1 per cent. Man Group declined to comment.

Read more here.

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • Meet the Man Behind the Largest Private Investment Fund, Part II
  • Meet the Man Behind the Largest Private Investment Fund
  • Is there a Private Equity Bubble?
  • Author
  • Recent Posts
Jeremy Jones, CFA
Jeremy Jones, CFA, CFP® is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. Richard C. Young & Co., Ltd. was ranked #5 in CNBC's 2021 Financial Advisor Top 100. Jeremy is also a contributing editor of youngresearch.com.
Latest posts by Jeremy Jones, CFA (see all)
  • Is It Time to Talk About the Defects of Index Funds Now? - August 12, 2022
  • Disney Catches Netflix in Streaming Wars - August 11, 2022
  • Prices for Electric Vehicles Going UP - August 10, 2022

Search Young Research

Most Popular

  • If the Phone Doesn’t Ring…It’s Me
  • Big Corporations Making Big Investments
  • DESANTIS RESISTS: Suspends Soros-Funded Destruction of America
  • SHOCK: Home Prices FALL in San Francisco as Market Dries Up
  • Federal Reserve Governor Signals MORE Big Rate Hikes
  • Your Retirement Life: Let the Slow and Steady Be Your Way of LIFE
  • The Power of a Compound Interest Table
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
  • Resilient Nordic Market Spawns Fast Growing Offshoot
  • The Key Ingredient to an $8 Million Estate Is This

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Could this Be the Vanguard GNMA Winning Edge?

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

RSS The Latest at Richardcyoung.com

  • Is Merrick Garland Taking the Blame to Protect Biden?
  • Our Commander-in-Chief Fumbles On
  • Buying A Boat: Who’s Looking Out for You?
  • DOJ Career Officers Disgusted by Garland’s Political Raid on Trump
  • Dick Young’s Investing in Fine Wine
  • If It Smells Fishy … ?
  • The Great Jon Rappoport on Kari Lake
  • How’s the Economy?
  • Your Survival Guy’s Favorite Number is 72: Here’s Why
  • DEMOCRATS PLAY DIRTY: Megynn Kelly Calls Bulls#$t on “Classified Documents” Story

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Copyright © 2022 | Terms & Conditions

 

Loading Comments...
 

    loading Cancel
    Post was not sent - check your email addresses!
    Email check failed, please try again
    Sorry, your blog cannot share posts by email.