PitchBook Benchmarks Reveal Private Equity Funds Post Strongest Returns Among Private Market Strategies
December 14, 2018
SEATTLE, Dec. 14, 2018 -- PitchBook, the premier data provider for the private and public equity markets, today released fund performance data through 1Q 2018 from its stand-alone performance measurement product, PitchBook Benchmarks. The comprehensive performance data is designed to help limited partners (LPs) and general partners (GPs) better understand private market fund performance relative to broader asset classes and other PE and VC strategies. In this edition, PitchBook uses a quarterly net asset value (NAV) index methodology to assess quarterly and historical performance of PE and VC funds relative to public equities. According to the data, PE funds have yielded the highest returns among private market strategies since 2001. On the flip side, VC funds have significantly underperformed when compounding returns since 2001 due to the damage of the dot-com bubble; however, the asset class has posted strong returns when the NAV index is rebased to more recent time periods like 2008 and 2013.
The PitchBook Benchmarks PDF and Excel data packs are available for download here.
"While the long-term perspective of private market funds is one of its purported benefits, investors nonetheless have a desire to evaluate fund performance on a regular basis and the ability to mark-to-market. This is a difficult undertaking in private markets with quarterly intervals being the shortest feasible timeframe to measure aggregate performance," said James Gelfer, senior strategist at PitchBook. "Using our NAV index methodology, we found PE has generated the strongest returns of any private market strategy across multiple time horizons. However, we also find PE returns to be highly correlated with public equities, corroborating recent research that has questioned the strategy's diversification benefits."
PitchBook leveraged a quarterly net asset value (NAV) index methodology for each fund included in PitchBook Benchmarks to assess quarterly performance and provide a more comprehensive picture of how private capital's relative performance to public equities continues to evolve. Key findings include:
PE funds have posted the strongest returns among private market strategies since 2001, as well as over the last five years and 10 years.
PE, VC and FoFs exhibit high correlations with each other, but the strongest correlation remained between PE funds and public equities across multiple time horizons. The correlation between the PE NAV index and the S&P 500 TR has been 0.75 since 2001. It is even higher when rebased to 2008, but the correlations fall to 0.51 since 2013.
VC funds have significantly underperformed private market peers when compounding returns since 2001; however, when rebasing the VC NAV index to more recent periods (i.e. 2008 and 2013), VC funds have posted strong returns on both an absolute and relative basis, outperforming most private market strategies.
PitchBook is a financial data and software company that provides transparency into the capital markets to help professionals discover and execute opportunities with confidence and efficiency. PitchBook collects and analyzes detailed data on the entire venture capital, private equity and M&A landscape—including public and private companies, investors, funds, investments, exits and people. The company's data and analysis are available through the PitchBook Platform, industry news and in-depth reports. Founded in 2007, PitchBook has offices in Seattle, San Francisco, New York and London and serves more than 20,000 professionals around the world. In 2016, Morningstar acquired PitchBook, which now operates as an independent subsidiary.