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Emerging Markets vs. North America - Median Returns by Vintage

by Gary Broughton

  • 16 Dec 2011
  • PE

Geographic focus is an important consideration for private equity investors and fund managers alike, with each market having distinct risk and return profiles. By examining the median returns by vintage we can make a comparison of funds investing predominantly in North America and those which focus on emerging markets.

Preqin, currently holds net-to-LP performance data for 511 funds which invest primarily in emerging markets. By using Preqin’s customized private equity benchmarks, we can generate the median returns by vintage year of these funds and gain insight into their performance compared to North America-focused funds.

The analysis shows that median returns are in the black for both markets across all vintage years within the sample. For vintage years later than 2000, funds which invest predominantly in emerging markets are showing higher median returns by vintage than funds which mainly invest in North America. Vintage 2001 funds show the greatest difference in returns with emerging markets-focused funds showing a median net IRR of 26.2%, compared to 9.5% for funds focused on North America. For more resent vintages, the difference is smaller, with a difference of 3.5 percentage points for vintage 2007 funds and 1.5 percentage points for vintage 2008 funds; however, these funds are still early in their fund lives and returns are likely to change in the future.

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