Analyzing private equity and the public indices over one-, three- and five-year time horizons through Q3 2011 shows that the private equity industry has outperformed the listed markets. However, it should be noted that any comparisons made between private equity and listed equities should be viewed in context, as private equity is an illiquid asset class where investors are committed over a longer period of time, whereas public equities are more liquid.
Private equity has generated annualized returns of 12.8% over the one-year period, 6.8% over three years and 6.7% over the five-year period. The S&P 500 reports a return of 1.2% over both the one- and three-year periods and -1.2% over five years. The MCSI Europe remains in the red over all the time periods shown while the MSCI Emerging Markets earned -16.2% over one year, 6.3% over three years and 4.9% over five years to 30th September 2011. Returns for the third quarter of 2011 were lower across private equity and the public markets than in previous quarters. This can be attributed to the economic uncertainty stemming from concerns over European sovereign debt, signs of a slowdown in China and wider market volatility.