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Private equity surpasses listed markets

Private equity returns have outperformed their listed counterparts prior to and throughout the financial crisis.

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Private equity returns have outperformed their listed counterparts prior to and throughout the financial crisis, according to figures from Preqin.

Returns from the asset class fell less sharply than listed investments immediately after the crisis, and have since recovered more quickly. 

The index shows that all private equity strategies, apart from venture capital, have surpassed the S&P 500 since 31 December 2000. The Preqin private equity index stands at 198.5 as of Q3 2011, while the S&P 500 came in at 105.1 for the same period. 

However, the index also revealed significant variation in the performance of the best and worst private equity funds. This highlights the importance of manager selection for investors, as there are over 1,830 funds currently seeking commitments.  

The top-quartile index shows large quarterly increases up until the financial crisis, and begins to move up again during 2009, continuing its ascent to 509.5 as of Q3 2011. 

The bottom-quartile index, meanwhile, peaked at 80.7 in Q4 2007 before suffering quarterly decreases as a result of the crisis, and has remained relatively flat since, standing at 49.1 as of Q3 2011. 

Distressed funds have shown the most impressive performance out of all strategies, with the distressed index standing at 322.1 as of September 2011.

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