Jacobie Fullerton is a quantitative research analyst at PitchBook.
PitchBook’s PE nowcast, which estimates the returns that market conditions support, has run hotter than reported PE returns for most of the past three years. The gap points back to the 2021 boom: what PE paid, what it borrowed, and how long it’s had to hold.
Reported PE returns came in below the PE nowcast in 10 of the 12 quarters from Q2 2023 through Q1 2026, by an average of 1.3 percentage points. Call it wind chill: the reading says mild, but PE portfolios have felt colder.
Reported PE return minus PE nowcast, by quarter, in percentage points
The PE Barometer estimates the return that market conditions support, while reported returns include what is happening inside PE portfolios. The nowcasts come from the PitchBook Private Capital Return Barometers report, which estimates US private market fund returns months before managers report them.
Possible explanations for the gap include companies bought at COVID-era peak prices, debt that became more expensive as rates climbed, and holdings held longer in a slow-exit market. Part of the gap may also be a reversal, since PE ran well ahead of its nowcast in 2020 and 2021.
Whichever explanations apply, most of them point the same way. Market conditions would typically have supported stronger returns than PE portfolios have recently delivered.
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