An ETF issuer, best known for riding thematic trades, is seeking to launch a new diversified investment strategy that channels the playbook of university endowments — including bets on the booming world of private markets.
The Tema Endowment ETF is set to put about 50% of its holdings toward equities or derivatives, 30% to fixed income and 20% to "other securities," potentially including allocations to private funds, interval funds or business-development companies, according to a filing with the U.S. Securities and Exchange Commission.
It's the latest in a new wave of applications from ETF issuers seeking regulatory permission to offer private investments, as Wall Street seeks to widen access to an asset class once reserved for the financial elite.
Apollo Global Management, in conjunction with State Street, last week registered for such a product. Others, including BondBloxx, have put out their own filings.
"With this and the Apollo filing, it's the beginning of a new frontier in ETFs — the packaging up of private and alternative investments," said Bloomberg Intelligence's Athanasios Psarofagis.
Demand from retail investors for the closed-off securities has boomed, with private markets now worth more than $13 trillion. Meanwhile, billions continue to pour into ETFs every month at the expense of old-fashioned mutual funds, offering a new pool of capital for the private industry.
Tema's paperwork submitted with the SEC on Friday did not specify a ticker or management fee. Its main investment strategy, which would be actively managed, would identify macro themes and trends that are "underappreciated by current market pricing and at greatest divergence with consensus opinion," the company said in its filing.
Investments categorized as "other securities" would not make up more than 15% of the fund's net assets, according to the filing. The SEC puts a 15% limit on open-ended funds holding illiquid investments, defined as those that can't be sold in seven days "without significantly changing the market value of the investment."
Yale University's endowment has been the model for higher-education investing. Money manager David Swensen led the endowment for more than three decades, helping to grow it from $1 billion in 1985 to more than $30 billion at the time of his death in 2021. He famously did so by diversifying into private equity, hedge funds and real estate, which revolutionized how other schools managed their money.
