PEGCC Performance Update: PE Continues Outperformance of S&P 500 and Provides Strong Returns for Public Pensions

Judge: “Our most recent Performance Update demonstrates that private equity continues to provide strong and reliable returns to our investors.”

Washington, D.C. – Private equity returns significantly outperformed the S&P 500 in the most recent analysis from the Private Equity Growth Capital Council’s Performance Update.  The industry’s returns (net of fees) outperformed the S&P 500 (including dividends) for 3-year, 5-year and 10-year horizons as of December 31, 2012 by 4.3, 5.1 and 7.0 percentage points, respectively.  Private equity performance is based on the Cambridge Associates U.S. Private Equity Index, which indicated private equity IRR returns of 15.2, 6.7 and 14.1 percent during the respective periods.

“Our most recent Performance Update demonstrates that private equity continues to provide strong and reliable returns to our investors – pension funds, university endowments and charitable foundations,” said PEGCC President and CEO Steve Judge. “With private equity investing $347 billion in more than 2,000 U.S.-based companies last year, these investments strengthen companies and lead to economic growth.”

The PEGCC Performance Update’s analysis of pension funds’ private equity performance also revealed impressive returns. Median private equity returns earned by the public pension funds (net of fees) studied outperformed the S&P 500 on 3-year, 5-year and 10-year horizons by 3.0, 3.0 and 5.9 percentage points, respectively.  A recent PEGCC whitepaper analyzing public pension investments found that private equity is the only asset class that has produced annualized 10-year returns over the average pension target return of 8 percent.

“The long-term trend shows that private equity investments yield higher returns for public pension funds than other asset classes,” said Bronwyn Bailey, PEGCC vice president of research. “These returns are invaluable to pension recipients and translate into stronger retirement security for police officers, fire fighters, public school teachers and more.”

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About the Private Equity Performance Update

PEGCC calculates the excess returns from private equity by comparing the median values from third party data providers to the S&P 500 Total Return index.  The research was compiled using data as of December 31, 2012, the most current data available.  All returns are calculated net of fees.