Report: Private Equity Consistently Beats the S&P 500
Judge: “The consistent private equity outperformance of public markets is essential for pension funds, university endowments and charitable foundations to achieve their investment goals.”
Washington, D.C., June 21, 2012 – The presidential election thrust the private equity industry into the spotlight, but often lost in the discourse are the superior returns private equity delivers to public pensions, university endowments and charitable foundations. The Private Equity Growth Capital Council (PEGCC) released a new analysis today, highlighting returns provided by private equity investments compared to the S&P 500. The research shows private equity outperformed (net of fees) the S&P 500 for 1, 5 and 10-year time horizons by 7.1, 5.7 and 7.6 percentage points, respectively. Private equity underperformed the S&P 500 during the 3-year time horizon due to the index’s historic dip during the financial crisis, which inflated S&P returns during this period.
“Private equity continues to outperform the S&P 500 over both near and long time horizons,” said PEGCC President & CEO, Steve Judge. “The consistent private equity outperformance of public markets is essential for pension funds, university endowments and charitable foundations to achieve their investment goals. Private equity helps provide retirement security to millions, makes college a reality for more students and funds charitable causes,” Judge concludes.
Private equity investments delivered similar returns (net of fees) to public pensions. PEGCC analysis of recently published data from eight pension funds shows median private equity returns exceeded the S&P 500 for 1, 5, and 10-year time horizons by 9.1, 7.9, and 8.6 percentage points.
“This analysis shows the consistent value private equity investment provides its beneficiaries. During a decade when many public indices barely outpaced inflation, private equity provided the superior returns helping investors meet their financial goals,” said Bronwyn Bailey, PEGCC Vice President of Research.
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