Bloomberg writes "With $1 Trillion Chasing Deals, Investors Park Cash in ETFs". The article tells us, "With private equity firms sitting on a record amount of cash they're struggling to invest, their clients are turning to exchange-traded funds for relief. BlackRock Inc. and State Street Corp., two of the world's biggest providers of ETFs, say an increasing number of institutional investors are using their products to park money earmarked for private funds. These investors -- pension plans, foundations and endowments that are under pressure to meet obligations -- are trying to eke out an extra return on cash that would otherwise languish in a money market fund." The piece quotes BlackRock's Armit Bhambra, "They can't afford to have money sitting in cash or similar low-yielding investments. It's difficult to justify sitting in cash for 24 months, so they're having to think about different ways to fund these types of mandates." Bloomberg explains, "The amount of dry powder -- money raised but not yet invested -- could hit $1 trillion by the end of year in private equity alone, after reaching $963 billion in July, according to researcher Preqin Ltd.... ETFs, which have grown to more than $4 trillion in assets, can give investors instant and diversified exposure to an asset class, while allowing for a quick liquidation to meet obligations. Unlike traditional money funds, they are exposed to the ups and downs of the underlying markets, and there's some debate about how liquid ETFs really are when they track inherently illiquid assets such as junk bonds.... Until that cash is used for deals, private equity investors "are putting the money into equity markets, plain and simple," said Wayne Bowers, Northern Trust Corp.'s Chief Executive Officer for Europe and Asia. "They’re making the money sweat.""

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