Our blog in The 2018 Preqin Alternative Assets Performance Monitor series analyzed private capital performance in comparison to public market indices. This instalment examines private capital fund performance by geographic focus, and explores the reasons for the higher returns in particular regions.
Performance in the private capital space is relatively similar across different regions, with median net IRRs between 10% and 11% for vintage 2005-2015 funds. North America- and Europe-focused funds hold the largest share of the private capital market and have posted the strongest returns, while Asia-focused funds offer the least attractive risk/return profile, with both the lowest median net IRR (+10.0%) and the highest displayed risk (15.1%) of the regions examined.
When examining the performance of vintage 2005-2015 private equity funds, all regions have witnessed a general increase in returns over the period. Asia & Rest of World-focused private equity funds outperformed both North America- and Europe-focused funds for 2005-2006, 2013 and 2015 vintages, while North America-focused funds have achieved the highest overall median net IRR (+12.2%) for private equity funds of 2005-2015 vintages.
Real estate fund performance has also steadily improved across all regions for 2005-2015 vintages, with Europe-focused funds recording the greatest increase in returns over the period. Like private equity, North America-focused private real estate funds have also performed well, with a median net IRR of 11.0%, just above that of Asia & Rest of World (+10.9%).
North America-focused funds have largely affected global median returns for infrastructure, natural resources and private debt, which is unsurprising given the region’s dominance in these industries. North America-focused funds that made their maiden investment between vintages 2010 and 2015 have achieved similar returns to the global median across these asset classes.
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