This is the third series looking at how Preqin helps alternative assets professionals with their key workflows. Series one examined how we can assist fund allocators in choosing the right funds for them, while series two discussed the ways in which we help fund managers in finding and attracting investment to their funds. Our third series looks at how Preqin provides tools to help both fund managers and investors benchmark their funds.
Tracking the Market
Our online platform includes performance information for almost 30,000 alternative assets funds across all asset classes. Our dedicated teams of researchers around the world reach out to fund managers directly on a daily basis, collecting their performance information at both a fund and firm level. We also use cutting-edge machine-learning technologies to collect and verify performance information from regulatory filings and investor reports.
We produce a number of freely available benchmarks that not only track the market as a whole, but also all major fund strategies individually. For hedge funds, the Preqin All-Strategies Hedge Fund benchmark provides a top-level view of the industry, while other benchmarks track funds according to their strategy, size, location, currency denomination and more.
For private capital funds, we produce market benchmarks that categorize funds according to their vintage year, location and fund type. We also calculate horizon IRRs that show the performance of asset classes as a whole over a given timeframe, enabling you to see at a glance how these sectors have performed over the past several years.
Create Your Own
We recognize, though, that viewing the market as a whole or with a pre-set granularity does not always help you to effectively benchmark your funds, which is why we enable you to create your own fully customizable benchmarks using any criteria you set. This can be tailored at an individual fund level, allowing you complete control over which funds you include or exclude.
You can either modify existing market benchmarks by removing or adding funds to adjust their scope, or build custom benchmarks from scratch. For investors, this enables you to create benchmarks that track your portfolio of funds, or to compare the predecessors or peers of funds to which you are considering committing. For fund managers, you can create a benchmark tracking your peers and competitors, or focus on a specific sector, strategy or fund approach. All of our custom benchmarks are based on our full fund database, meaning you can create benchmarks based on dozens of criteria and thousands of potential combinations.
Behind the Headlines
Benchmarking funds based on their headline performance – net IRRs or 12-month returns – will rarely tell you everything you need to know, and is simply not possible for some funds. That is why we track a wealth of metrics to help you evaluate a fund’s performance.
For private capital vehicles, we include metrics such as DPI, RVPI and multiples, as well as overall net IRR figures. This means you can even benchmark vehicles that are early enough in their lifecycle that IRR figures are not meaningful. For hedge funds, we track monthly, annualized and cumulative returns for up to 20 years where available, as well as volatility, Sharpe and Sortino ratios. This means you can get under the hood of performance and benchmark vehicles according to the metrics that matter most to you.
If you would like to find out more about creating benchmarks with Preqin, please click here to receive a free demo, or get in touch with us at email@example.com.
While it is vital to be able to compare funds against one another, we understand that you also need reliable and convertible ways to compare them to public markets. In part two of this series, published on Wednesday, we look at how Preqin can help you in benchmarking against public indices.