Secondaries Net IRR Dispersion

by Hayley Wong

  • 14 Jan 2011
  • PE

Preqin holds information on 211 secondaries funds and has performance data for 121 funds. In terms of capital, Preqin Performance Analyst has data for over 80% of all secondaries funds.

Looking at the spread of returns produced by secondaries funds across the vintages, vintage 1999 secondaries funds show a wide spread of returns, with IRRs ranging from -3.8% to 39.7%. The returns for vintage 2002 secondaries vehicles are more clustered, with a difference of around 16.0 percentage points between the maximum and minimum IRRs. The majority of the IRRs for vintage 2005 secondaries funds are within two percentage points of the median benchmark, while one fund had produced outsized returns of 36.4%.

The highest IRR produced is by a vintage 2004 secondaries fund with an IRR of 48.3%; this is closely followed by 47.0% produced by a vintage 2008 fund. The lowest return produced is -9.6% from a 2006 vintage secondaries fund. More recent vintage secondaries funds will have been impacted by the financial crisis but they are still at the early stages of their investment cycle and their performance is likely to improve over time.

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