PSP ETF: Golden Cross or Fool's Gold? A Contrarian's Take on Technical Optimism vs. Structural Flaws

The Invesco Global Listed Private Equity ETF (PSP) has sparked excitement among technical traders this summer, fueled by a Golden Cross in the S&P 500 and converging moving averages signaling bullish momentum. Yet beneath this surface-level optimism lies a stark contradiction: an ETF with structural flaws, high fees, and underperformance relative to its peers. For investors, the question is clear: Is PSP's current technical setup a golden opportunity—or a trap disguised as a bull market play?

The Technical Bull Case: Golden Cross and Rising Momentum

PSP's bullish technicals are undeniable. The S&P 500's Golden Cross—where its 50-day moving average (DMA) crossed above the 200-day—occurred on July 2, a signal historically linked to upward momentum. This broader market tailwind has spilled over to PSP, which trades near resistance at $69.98 (as of July 3, 2025). Swing traders are eyeing a break above $70.32 for further gains, while support at $65.67 acts as a bullish anchor.

The ETF's own technicals show a rising 50-day moving average converging with its 200-day, a pattern suggesting a potential breakout. Meanwhile, its 10-day RSI at 78—deeply overbought—hints at short-term froth, but bulls argue this is a sign of strength, not weakness.

The Fundamental Contradiction: Structural Flaws and Long-Term Underperformance

High Fees Eroding Returns

PSP's expense ratio of 1.33% (as of July 2025) is nearly double the average for equity ETFs. While the fund has outperformed its category in the past year (18.74% vs. 15.34%) and three years (21.92% vs. 10.04%), these gains are diluted by its high fees. Over five years, the compounding effect of these costs could erase 20–30% of returns compared to lower-cost alternatives like the VanEck Vectors Private Equity Authors (PEZA).

BDC Exposure: A Volatility Time Bomb

PSP's portfolio is heavily weighted in Business Development Companies (BDCs), which rely on debt financing and often underperform during rising interest rates. These high-beta holdings contribute to PSP's 1.33 beta, making it 33% more volatile than the market. In contrast, direct investments in private equity firms like KKR or Blackstone (BX) offer better transparency and lower correlation to public markets.

Underperformance vs. Direct Holdings

While PSP claims diversification, its returns pale next to top-tier private equity firms. For instance, KKR's stock has delivered 25% annualized returns over five years, versus PSP's 15% during the same period. The ETF's structure also limits investors to listed private equity firms, excluding unlisted gems that often outperform.

Why the Technicals Are Misleading: A Contrarian's Warning

The Golden Cross Isn't a Free Pass

The S&P 500's Golden Cross is a broad market signal, not a mandate for sector-specific plays like PSP. Even if the ETF breaks above $70, its structural issues—high fees, BDC exposure, and concentration in top holdings (46.73% of assets)—will drag it down long term.

Overbought Metrics and Volatility

PSP's 10-day RSI of 78 suggests short-term overextension. A pullback to $68.62 or lower could trigger stop-losses, especially given its 20-day volatility of 17.13%, which ranks it in the top 13% of peers.

The ETF's “Golden” History?

PSP's 10-year net AUM change of -161.4M tells a story of investor disillusionment. While it's outperformed in shorter periods, its long-term track record lacks consistency—a red flag for buy-and-hold investors.

Investment Advice: Avoid the Fool's Gold

For Traders:
- Short-term plays at resistance levels ($69.98) could work, but set tight stops. A break below $65.67 signals a shift to bearish momentum.

For Investors:
- Avoid PSP entirely. Its structural flaws and high fees make it a poor long-term hold.

Better Alternatives:
1. Direct Private Equity Firms: KKR (KKR) or Blackstone (BX) offer better access to deals and lower volatility.
2. Lower-Cost ETFs: PEZA (0.52% expense ratio) or the Global X MSCI Private Equity Authors (PEAH) provide diversified exposure without PSP's fees.

Conclusion: The Technicals Are a Distraction

PSP's recent technical signals are a siren song in a sea of structural risk. While bulls may chase momentum, the ETF's high fees, volatile BDC exposure, and underperformance vs. direct holdings make it a poor bet for all but the most aggressive traders. For most investors, the Golden Cross is a mirage—and the real gold lies elsewhere.