Private Equity Continues To Provide Superior Risk-Adjusted Returns To Investors
Performance Update Results Illustrate Private Equity’s Continued Value To Public Pension Funds
WASHINGTON, D.C. – The American Investment Council (AIC) has released its latest Performance Update report, which details private equity performance through returns, net of fees, during the first quarter of 2016 on 1-, 3-, 5-, and 10-year time horizons. The Performance Update also compares private equity benchmark returns to public equity returns by analyzing the performances of the Russell 3000 Index and the S&P 500 Index. According to the report, median private equity benchmark returns surpassed Russell 3000 returns for each of the four time horizons and exceeded S&P 500 returns on 1-, 5-, and 10-year horizons.
“This Performance Update shows why private equity is such an attractive asset class for investors year in and year out,” said AIC President and CEO Mike Sommers. “Private equity’s impressive performance is a direct product of the industry’s alignment of interests with their investors. Funds have the proper incentives to maximize returns while minimizing risks. But investors aren’t the only ones who reap the rewards from these strong returns; pension recipients, businesses, and employees across the country are all better off when private equity excels.”
The report indicates private equity outperformed the Russell 3000 and S&P 500 indices in the short-run (1-year) by 3.6 percent and 1.5 percent, respectively, as well as in the long-run (10-years) by 3.8 percent and 3.7 percent, respectively. Private equity produced equally impressive returns for public pension funds during the same horizons, with returns outpacing public equity returns for all four time horizons. Most notably, pension fund private equity investments returned 9.3 percent on a 1-year basis, compared to returns of -0.3 percent for the Russell 3000 Index and 1.8 percent for the S&P 500 Index.
“In a persistent low interest rate environment, pension funds across the U.S. have been searching for returns that can help them meet their obligations,” said AIC Vice President of Research and Investor Relations Bronwyn Bailey. “This report demonstrates why private equity has become a go-to asset class for so many pension funds and other investors. In recent years, our industry has proven its value by providing strong returns over short-, mid-, and long-term horizons, regardless of market performance at large.”
About the American Investment Council
The American Investment Council (AIC) is an advocacy and resource organization established to develop and provide information about the private investment industry and its contributions to the long-term growth of the U.S. economy and retirement security of American workers. Member firms of the AIC consist of the country’s leading private equity and growth capital firms united by their successful partnerships with limited partners and American businesses. More information about the AIC can be found at www.investmentcouncil.org.