GPZ ETF: Question & Answer

The structural growth of private markets has emerged as one of the most significant finance and investing developments in recent years. This is driving growing interest among investors and wealth managers and demand for exposure to these opportunities. The VanEck Alternative Asset Manager ETF (GPZ) provides investors with a way to participate in the growth of private markets by offering access to asset managers involved in private equity, private credit, venture capital, buyouts, private infrastructure, and private real estate.

This blog is intended to address frequently asked questions about investing in alternative asset managers and specifically, GPZ.

• What are alternative asset managers?
• Why have alternative asset managers gained attention as potential investment opportunities?
• What are GPZ’s holdings and how is its portfolio determined?
• Do alternative asset managers pay notable dividends?
• What risks are associated with alternative asset managers?
• How can GPZ fit within a portfolio?

What are alternative asset managers?

These are firms that specialize in managing alternative investments, which encompass a range of non-traditional assets that fall outside of traditional stocks, bonds and cash. This includes assets like private equity, venture capital, direct lending, infrastructure, and real estate. Prominent firms in this space include Brookfield, Blackstone, KKR and Apollo.

Why have alternative asset managers gained attention as potential investment opportunities?

Alternative asset managers have strong fundraising capabilities and are strategically positioned in fast-growing sectors with long-term tailwinds. They are continuously innovating and scaling to deliver growth, while also benefiting from the long-term capital commitments associated with many of their investment vehicles.

Private assets also offer differentiated risk-return profiles compared to traditional stocks and bonds, providing diversification benefits and potential for higher returns. Additionally, alternative investments can offer unique exposure to transformative secular themes such as AI, healthcare innovation, and power infrastructure. Demand for these exposures has resulted in increased assets under management for alternative asset managers.

What are GPZ’s holdings and how is its portfolio determined?

GPZ’s underlying index is the MarketVector^TM Alternative Asset Managers Index. This is a rules-based, modified capitalization weighted, float adjusted index comprised of equity securities of publicly traded U.S., Canadian and developed European alternative asset management companies. To be initially eligible for the Index, companies must derive at least 75% of their revenues or operating assets from alternative asset investing. Alternative asset investing comprises private equity, private credit, venture capital, buy-outs, private real estate, and private infrastructure. View GPZ’s holdings here: VanEck Alternative Asset Manager ETF holdings.

Do alternative asset managers pay notable dividends?

While many of the investment vehicles managed by alternative asset managers tend to offer high yield, particularly in private credit, the yield profile of the managers themselves can vary significantly from company to company. GPZ is not expected to be a high-yielding ETF, but the underlying companies have tended, on average, to yield slightly higher than the broad U.S. equity markets historically.

What are the risks of investing in alternative asset managers?

Alternative asset managers have benefited from a great deal of market demand for the investment services they offer. However, they are not without risk. Alternative asset managers are subject to pressure associated with adverse market conditions. In periods of slowing economic growth, fundraising may slow and opportunities to realize value through portfolio exits may be impeded. Alternative asset managers are also likely to see increasing competition, which may result in less, or lower quality investment opportunities as well as fee compression.

How can GPZ fit within a portfolio?

GPZ can be integrated into an investment portfolio as a long-term strategic allocation providing both diversification benefits and access to potential growth opportunity amidst the push towards alternative assets and private equity. Additionally, because of its targeted exposure, GPZ can be used more tactically by investors to express a shorter-term view of private markets in an efficient and low-cost way.