Private equity fund performance ended 2023 with positive momentum, a trajectory that is expected to continue into 2024 results as they become available.
After a year of muted exit and M&A activity stifling private equity fund performance, global PE funds saw an uptick in return projections at the tail end of the year. Global PE funds’ one-year IRR—which estimates the profitability of unrealized investments—ended 2023 at 10.5%, up from 8.5% in Q3 2023, according to PitchBook’s Q4 2023 Global Fund Performance Report.
In addition to strong quarter-over-quarter improvement, the IRR bump marks a re-entrance into double-digit territory for the estimated value of funds’ underlying assets.
PitchBook analysts expect the upward movement to continue into 2024 fund performance figures, largely because of the slight increase in exit activity, which increased year-over-year through H1 2024. A reopening of the exit environment provides PE managers with the opportunity to exit their best investments and generate returns for limited partners.
Still, the asset class continues to trail behind fund performance figures seen over the past decade. Future figures will depend largely on public market returns, which private market returns typically lag.
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