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PrEQIn Infrastructure Quarterly Index vs. All Private Equity and S&P Indices

by Darren Fernandes

  • 06 Dec 2016
  • INF

Methodology

The PrEQIn Infrastructure Index captures the average returns earned by investors in their infrastructure portfolios, based on the actual amount of money invested. The PrEQIn Infrastructure and PrEQIn All Private Equity indices are calculated on a quarterly basis using data from Preqin’s Infrastructure Online and Private Equity Online services respectively.

By rebasing the index to 100 as of 31 December 2007, we can compare the historical performance of infrastructure funds compared with private equity funds following the onset of the Global Financial Crisis (GFC). The S&P Global Oil Index TR and S&P Global Infrastructure Index TR have also been included for comparison with the public market alternatives.

The PrEQIn Index

In the wake of the GFC, the PrEQIn All Private Equity Index experienced five consecutive quarters of decline to Q1 2009, reaching a low of 73.4 index points. Following suit, albeit to a greater extent, the S&P Global Oil Index TR and S&P Global Infrastructure Index TR fell to a low of 54.6 and 51.3 respectively for the same period. In comparison, PrEQIn Infrastructure experienced a delayed reaction to the GFC, rising for three consecutive quarters before falling to a low of 93.7 as of Q3 2009. The contrast in performance during this period highlights infrastructure’s low correlation with other asset classes and the public market – a positive characteristic for investors looking to further diversify their investment portfolio.    

Since then, the PrEQIn Infrastructure Index surpassed its starting point just one quarter after posting its period-low and saw quarter-on-quarter growth all the way up to Q1 2016. In contrast, the PrEQIn All Private Equity Index did not rise above 100 points until Q1 2011, which is indicative of the greater impact of the GFC on the asset class. Despite this, PrEQIn All Private Equity has since followed a similar trend to PrEQIn Infrastructure, seeing growth at an even greater rate, with the index standing at 179.6 as of Q1 2016, compared with 186.9 for infrastructure. Contrastingly, the returns for both public indices have been more volatile. As of Q1 2016, the S&P Global Infrastructure Index TR stands at 112.6, while the S&P Global Oil Index TR posted lower returns (72.3) than those seen before the GFC,. The decline in these indices from Q2 2014 onwards, particularly for the S&P Global Oil Index TR, can be attributed to the volatility seen in commodity markets and the fall in oil prices during the period.        

PrEQIn Infrastructure has outperformed PrEQIn All Private Equity and both public indices since its inception in 2007. With higher returns following the GFC, as well as quarter-on-quarter growth since, it is evident that the infrastructure asset class continues to offer investors the opportunity for stable returns, as well as diversification from traditional asset classes.

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