A new mutual fund set to launch will allow average investors to invest in private equity, according to Dow Jones.

On July 2, Vista Research and Management will launch Listed Private Equity Plus, an open-end mutual fund with a private equity focus. The fund’s initial offering period will close June 30.

Vista has no previous experience in advising investment accounts or a mutual fund.

“Nobody in the U.S. is doing this,” said Steven Samson, president and chief executive and lead manager of the fund. 

The Chappaqua, N.Y. based company is relatively new. It was formed in January, but Samson has been involved in fund innovations in the past.

Listed Private Equity Plus will invest in stocks of publicly listed financial institutions and private equity companies that lend capital to or provide advice or investment banking services regarding private equity transactions, according to a prospectus filed with the Securities and Exchange Commission.

Private equity companies, business development corporations, investment banks and special-purpose acquisition companies are some investments that will likely be included in the fund.

The fund will be available mainly through financial intermediaries. “There’s not an awful lot of history of your traditional mutual fund investor investing in private equity, so we think having the financial adviser there as a consultant is critically important,” Samson said.

Mutual fund observers think that the fund may face liquidity and volatility issues and its success will rest largely on managers’ ability to choose the right private equity vehicles. In addition, it may face valuation challenges, they said.

It was inevitable that a fund such as this would come about. The U.S. has lagged behind Europe, where a number of private equity firms have been listed for 60 years or more, Samson noted.

While Morningstar mutual fund analyst Andrew Gunter is not familiar with any mutual fund with a private equity theme, he fears the fund may be based on the latest trend and could therefore be risky to investors.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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