Returns from private equity (net of fees) beat the S&P 500 (including dividends) for 5-year and 10-year horizons as of June 30, 2013 by 1.2 and 6.8 percentage points, respectively. Despite generating over 15 percent annualized returns, private equity funds underperformed the S&P 500 in 1-year and 3-year horizons due to the public market rally.
“Investors in private equity, the majority of whom are pension funds, university endowments and charitable foundations, benefit from the consistent outperformance of private equity over public markets,” said PEGCC President and CEO Steve Judge. “Private equity is patient capital that drives economic growth by strengthening companies over the long-term. It is a winning formula for both investors and the national economy.”
The PEGCC’s measure for private equity fund performance is based on the median of publicly available benchmarks. This measure indicates private equity funds returned an annualized 14.1, 8.2, 15.7, and 15.6 percent during 10-year, 5-year, 3-year and 1-year periods, respectively.
“Private equity continues to outperform public markets over the long-term,” said Bronwyn Bailey, PEGCC vice president of research. “The sharp rebound in public markets in 2012 and 2013 will likely affect short-term comparisons of the S&P 500 to private equity. Yet, consistent, long-term private equity performance helps to maximize returns and mitigate volatility risk for the portfolios of pension funds, charitable foundations and university endowments.”
PEGCC calculates the excess returns from private equity by comparing the median values from third party data providers to the S&P 500 Total Return index. The research was compiled using data as of June 30, 2013, the most current data available. All returns are calculated net of fees.
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The Private Equity Growth Capital Council is an advocacy, communications and research organization, and resource center established to develop, analyze and distribute information about the private equity and growth capital investment industry and its contributions to the national and global economy. Established in 2007, the PEGCC is based in Washington, DC (www.pegcc.org).
© 2014 PEPD • Private Equity’s Leading News Magazine • 1-17-14