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Private Equity and returns
Between 1980 and 2005, the top-quartile private equity firms delivered average annualized net returns of 39 percent, significantly beating the S&P 500 and other public market indices. Those superior returns helped strengthen several major public pension funds and defined benefit programs – PEC analysis of data from Venture Economics and Bloomberg
By 2008, the total net profits distributed to investors worldwide by private equity funds raised through 2007 were $1.12 trillion – Private Equity Intelligence
The 20 largest public pension funds for which data is available – including the California Public Employees Retirement System, the California State Teachers Retirement System, the New York State Common Retirement Fund, and the Florida State Board of Administration – currently have nearly $140 billion invested in private equity on behalf of 10.5 million beneficiaries - Private Equity Intelligence
Private equity funds have consistently outperformed the S&P 500 and NASDAQ over virtually all investment horizons. The one-year PEPI (Private Equity Performance Index) average return for private equity funds as of September 30, 2007 was 27.9%, compared to 14.2 percent for NASDAQ and 10.8 percent for the S&P 500. The 20-year PEPI average return for private equity funds from 1987-2007 was 12.8 percent, compared to 9.4 percent for NASDAQ and 8.1 percent for S&P - Thomson Financial US Private Equity Performance Index (PEPI)
Public and private pension funds have over $500 billion committed to private equity. Their investments in PE delivered significantly higher returns than the rest of their investment portfolios. Moreover, PE can be seen as a “consistent and ultimately low risk” investment, since it outperformed the pension plan’s other investments in at least 82 percent of cases, taken across the full range of time horizons between one and ten years – 2008 Preqin Global Private Equity Review
On average, public pensions commit seven to eight percent of their assets under management to private equity investments, corporate pensions commit six to seven percent and university endowments commit nine to ten percent. This does not include for-profit asset managers, whose allocations to private equity also have been growing rapidly - Russell Survey on Alternative Investing