Ackman's New Fund Trades at 22% Discount to Low-Cost ETF Rivals
Bill Ackman’s Pershing Square USA fund is trading at a steep 22% discount to its net asset value, forcing investors to weigh its 2% management fee against cheaper broad-market ETFs that hold the same mega-cap stocks.
Bill Ackman’s Pershing Square USA (PSUS) has fallen to a 21.79% discount to its net asset value since launching in April, raising questions about the true cost of accessing the billionaire investor's concentrated stock-picking strategy.
The closed-end fund was structured to give ordinary investors a direct line to Ackman's portfolio without the steep minimum investments usually required by hedge funds. While PSUS does not charge a performance fee, it carries a 2% annual management expense. For market professionals, that ongoing levy represents a substantial hurdle when compared to widely available passive alternatives.
Investors seeking to mirror Ackman's public market bets can instead utilize standard Vanguard ETFs. The Vanguard Mega Cap ETF (MGC) and the Vanguard Growth ETF (VUG) each hold seven of Ackman’s eight publicly traded positions. These core holdings include Microsoft, Amazon, Alphabet, Meta Platforms, and Uber. MGC charges an annual fee of just 0.07%, while VUG costs a mere 0.03%.
Neither Vanguard fund is actively managed to track Pershing Square. However, their broad indexes overlap heavily with the specific mega-cap growth names that have driven Ackman's long-term outperformance. This creates a distinct calculus for portfolio managers weighing active versus passive allocation.
Purchasing PSUS at a deep discount theoretically provides a margin of safety if the share price eventually closes the gap with its underlying assets. However, closed-end funds frequently trade at persistent discounts, making NAV convergence an unreliable strategy. Furthermore, the 2% management fee continuously erodes the very net asset value that investors are buying at a discount.
The divergence between PSUS and its ETF proxies highlights a fundamental tension in current markets. Allocators must decide if paying a premium fee for a concentrated, actively managed portfolio is worth the capital drag, or if simple, low-cost exposure to dominant mega-cap tech stocks is the more efficient path.
