The private equity (PE) asset class is notoriously opaque, when it comes to divulging information about the performance of investments and funds. Private equity performance statistics should always be analysed with some scepticism. The two main methods to analyse private equity performance are the Public Market Equivalent method, which benchmarks against listed companies or an index; and Value Attribution Analysis, which traces the sources of value creation in an investment. Historically, the PE asset class has returned between 9 and 12% on average; and the top/bottom quartile spread is over 20%.
Key learning objectives:
What are the key performance metrics?
How does PME work?
How does VAA work?