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Analyst Note: Tracking the persistence of PE managers' performance?uq=8lCq2teR

2017

Analyst Note: Tracking the persistence of PE managers' performance

July 14, 2017

Analyst Note: Tracking the persistence of PE managers' performance?uq=8lCq2teR
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In the latest research note from the PitchBook Private Equity Analysis team, how PE returns at the firm level stack up against public market equivalents (PME) is explored in-depth. Breaking out managers into quartiles based on fund performance, our analysts then examine how the different populations of fund managers perform across all relevant funds in order to assess the consistency of performance. In addition, just how differently high performers versus lower performers fare when comparing their returns utilizing a Kaplan-Schoar PME is analyzed.

Key takeaways: 

  • Top-ranked firms outperformed bottom-ranked firms by an average internal rate of return (IRR) of 19%, signifying the degree to which manager selection affects returns.
  • 78% of funds raised by top-ranked firms have delivered returns above the industry’s median— 47% of all their funds ranked in the top quartile.
  • Despite much smaller returns relative to better-performing peers, bottom-ranked firms still outperformed public markets at the one and 15-year periods while performing nearly even with public equities over a three to 10-year horizon.