At Preqin, we have examined the one-, three- and five-year annualised returns of private equity funds as of June 2010 to enable us to compare the performance of the private equity industry with the performance of listed equities.
The one-year private equity return stands at 17.6%, the three-year return at -1.9% and the five-year return at 15.7%. Standard & Poor’s 500 returned 14.4%, MSCI Europe 5.7% and MSCI Emerging Markets 23.2% over the one-year period. All the indices over the three-year period are in the red. Over the five-year period, the returns of MSCI Emerging Markets are significantly higher, at 12.7%, than for MSCI Europe and Standard & Poor’s 500.
It should be noted however, that the comparison of private equity with listed equities needs to be viewed with caution as the private equity asset class is illiquid. Private equity investors are committed over a long period of time and therefore these returns are not as relevant as they are for the more liquid listed markets.