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Fund Performance

PE lands in middle of pack for secondaries fund returns

PE secondaries generated positive yet modest fund returns compared to VC secondaries, which came in with the weakest figures due to steep valuation declines, and real asset secondaries with the highest figures.

Private equity secondaries funds fell in the middle of the pack in recent performance estimations.

Compared to VC secondaries, which came in as the weakest performer due to steep valuation declines, and real asset secondaries as the highest performer, PE secondaries generated positive yet modest preliminary returns.

Its 1-year horizon IRR is 7.93%, well above VC’s 15.24% loss but significantly below the blowout 16.36% gain of real assets, according to the Secondaries PitchBook Benchmarks (as of Q1 2023).


PE’s positive performance is a product of its mature, profitable assets and a challenging fundraising environment.

“PE secondaries have fared better than VC secondaries because, although PE assets more broadly did see write-downs, they were not as severe as the valuation drops in VC,” said PitchBook fund strategies analyst Juliet Clemens.

PE portfolio companies tend to be more mature than those of venture capital, which means they are already generating cash flow. This provides the asset class with some level of insulation from wild fluctuations in valuations, according to Clemens.

“While PE assets did see write-ups in [net asset value] in H2 2020 through H1 2021, the write-ups were not as high as those in VC,” she said. “So when valuations did come back to earth, they did not fall as fast and hard as they did in VC.”

Clemens said real assets received an overall boost due to a “commodities supercycle,” where prices in oil and gas and critical minerals have undergone sustained increases. Coming off the tail end of a historical undercapitalization since 2015, a constricted supply of certain commodities has driven their prices up.

Secondaries overall marked its seventh consecutive quarter of outperformance relative to other asset classes.

In Q1 2023, the strategy outperformed the average of all private capital strategies by 3.1 percentage points, according to PitchBook’s latest Global Fund Performance Report.


The surge in secondaries performance is a product of LP demand for liquidity coupled with plummeting private asset valuations and an unfavorable exit environment. In short, LPs want cash and GPs want to hold onto their assets—an optimal position for secondary solutions.

The largest asset managers raised massive secondary funds in response to the demand. In January, Blackstone closed on a combined $24.9 billion for its Strategic Partners IX and Strategic Partners GP Solutions funds, and in September, Goldman Sachs Asset Management closed a dedicated $14.2 billion vehicle.

“Secondaries funds seem to be very confident that there will be attractive opportunities in the space over the next few years in both the LP-led and GP-led spaces,” Clemens said.

Featured image by Tomazl/Getty Images

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