Thanks in large part to exchange traded funds, private credit and private equity are increasingly accessible to broader swaths of the wealth management and retail investment communities. The demand is there and ETF issuers are meeting it. It’s as simple as that.

Broadly speaking, increased democratization of private equity investing is positive. It’s provides ordinary investors with the opportunity, albeit often in indirect fashion, to get exposure to previously hard-to-reach assets and as an alternative asset class, private equity can provide some portfolio diversification at a time when correlation concerns abound.

That’s not to say private credit and equity are worry-free. Experts and market observers frequently ponder the liquidity, or lack thereof, associated with private market assets. To be sure, that’s a conversation worth having.

“Private equity has some drawbacks compared with investments in public stocks,” observes Eric Liu of EQT. “Historically, the main challenge has been liquidity, with investments usually tied up for five or more years. Private equity investments are illiquid by their nature, and liquidity in PE is generally only realized by exit events, which are often dependent on favourable market conditions. ”

A new ETF may be the right tool to address private equity liquidity concerns.

Good Timing for GTPE

In what may prove to be a case of a rookie ETF being well-timed, the Goldman Sachs MSCI World Private Equity Return Tracker ETF (NASDAQ: GTPE) came to market on Thursday. GTPE benchmarks to the MSCI World Private Equity Return Tracker Index and its objective is easy to comprehend: generate private equity-style returns by tapping publicly traded stocks.

Said another way, GTPE holds stocks, making it a liquid asset and much more so than legacy private equity investments.

“Investors are looking for new ways to capture private equity return drivers with the transparency and efficiency of public markets,” according to Goldman Sachs Asset Management (GSAM). “This new ETF bridges the gap - combining Goldman Sachs’ investment expertise with MSCI’s data driven innovation - seeking to deliver private equity-like returns in a liquid, index-based format. ”

Potentially bolstering the case GTPE’s liquidity is that the infant ETF is actively managed. It’s run by Goldman’s quantitative investment strategies team, indicating there’s a human (and likely technological) touch involved that can keep GTPE and end users, including advisors, on the right side of the private equity liquidity equation.

GTPE Has Another Big Perk

In addition to potentially acting as a solver of private equity liquidity issuers, GTPE offers investors another benefit. As is the case with any other ETF, investors can buy GTPE and sell it in a matter of hours, days or weeks should they so choose. Conversely, traditional private equity investing requires investing to be locked in for multi-year timeframes.

“Unlike traditional private equity, which requires long-term commitments and has limited redemption options, GTPE aims to deliver private equity-like returns with the liquidity and transparency of an ETF. This makes it an ideal bridge between illiquid private funds and liquid public market investments, offering a truly liquid component in an otherwise illiquid alternatives portfolio,” according to GSAM.

All that for a favorable cost of admission of 0. 50% per year – far less demanding than what’s found in old guard private markets world.