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Despite recent lacklustre returns in the public markets, private equity continues to deliver superior returns to its investors – pension funds, charitable foundations and university endowments. New research released today by the Private Equity Growth Capital Council (PEGCC) shows that private equity returns (net of fees) outpaced the S&P 500 (including dividends) for each return horizon, besting the index’s annualised 10-year return by 7.5 percentage points and 5-year return by 5.8 percentage points.
Large public pension funds also continue to report superior returns from their private equity investments. PEGCC’s analysis of recently published data from 15 pension funds that are among the 50 largest funds by assets shows median private equity returns exceeded the S&P 500 for 1-, 3-, 5-, and 10-year time horizons by 1.3, 0.3, 5.9, and 7.3 percentage points. “By providing pension funds annualised returns of 12.6 percent over the past 10 years, private equity investing is essential to sustaining public plans’ funded status by growing assets at a faster rate than portfolio target returns of seven or eight percent,” Bailey concluded.
“The research released today confirms that private equity is a top performing asset class for large public pension funds, charitable foundations and university endowments. Private equity delivers superior returns that help to strengthen the financial security of millions of hard-working Americans, increases funds available to charities and bolsters assistance to students nationwide”, said Steve Judge, president and CEO of the Private Equity Growth Capital Council.
Private Equity Performance Update