European PE funds delivered the strongest performance globally in Q3 2024, the second quarter in a row, as they hit the highest return rate since Q2 2022.
The rolling one-year IRR of European PE funds reached 14.1% in Q3 2024, up from 0.2% in the previous quarter, according to PitchBook’s latest Global Fund Performance Report.
The EU funds outperformed North American PE funds, which saw a 10.5% one-year IRR in the period. Funds from the rest of the world, comprising mainly Asian funds, returned 6.1%.
In addition to being the best-performing group for the second consecutive quarter, European PE funds also saw the largest quarter-over-quarter increase in performance.
The continued rise of mega-funds—vehicles over €1 billion (around $1.13 billion)—supported the outperformance in Europe.
Mega-funds perform better than smaller funds over a longer period. They outperform non-mega-funds from five-year returns onward, and the outperformance becomes larger over a longer time, according to PitchBook’s analyst note The Rise of European Megafunds: Part II.
Mega-funds also close quicker, face shorter gaps between fundraising and receive higher step-ups.
However, preliminary data is pointing to a weaker PE performance in Q4, likely pulling full-year returns back into single digits and trailing the MSCI World Index’s 17% gain.
It remains to be seen if the monetary easing by major central banks in 2024 could boost PE performances in 2025.
Featured image by PM Images/Getty Images
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