PrEQIn Private Equity Quarterly Index: Fund Quartile Indices Over Time

by Gary Broughton

  • 28 Sep 2012
  • PE

It is an important and challenging task for an investor to monitor and assess the performance of an investment portfolio, and many different metrics are required in order to maintain an effective private equity program. The PrEQIn Private Equity Index  is the first index covering the whole private equity industry and allows investors to compare the returns of their private equity portfolios to those from other asset classes. Calculated on a quarterly basis using data from Preqin's Performance Analyst product, the PrEQIn Private Equity Quarterly Index models quarterly cash flow transactions and NAVs reported for over 4,100 individual private equity partnerships.

Preqin currently holds performance data for over 6,100 funds and assigns quartile rankings based on the IRR and multiple of each fund. The PrEQIn Private Equity Quarterly Index has been generated for funds within each performance quartile ranking assigned by Preqin. From Q4 2000, the index for each quartile ranking declined initially; however, the PrEQIn Top Quartile Index increases back to over 100 in Q4 2002, with the PrEQIn Second and Third Quartile indices moving back above 100 in Q3 2004 and Q2 2005 respectively. The PrEQIn Top Quartile Index subsequently shows sharp quarterly increases from Q4 2002, reaching 396.8 in Q2 2008 before declining for several quarters due to the financial crisis. After the index bottomed out in Q1 2009, the Top Quartile Index began to increase sharply, reaching its highest point of 499.5 in Q2 2011. The Second and Third Quartile indices show similar trends, with both indices remaining above 100 since Q2 2005. The Bottom Quartile Index shows much flatter performance during the period. After an initial decline until Q2 2003, the Bottom Quartile Index began to gradually recover until the financial crisis caused further subsequent quarterly decreases. The Index has remained relatively flat since reaching its lowest point in Q2 2009, standing at 47.5 as of Q4 2011.

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