UK Private Equity Returns Outperforming Over Long Term
Long-term returns from UK private equity funds have improved over the past year according to a survey published today by the British Private Equity and Venture Capital Association (BVCA) in conjunction with PricewaterhouseCoopers LLP and Capital Dynamics.
The survey shows that UK private equity funds have outperformed both the stock market and UK pension funds over the ten years up to the end of 2007.
The private equity industry recorded ten-year returns of 20.1% compared with 6.2% for the FTSE All-Share index and the 7.1% average return from total pension fund assets.
The latest performance figures show a sharp increase in returns measured over a three year period but this partly reflects the changing composition of BVCA membership since a number of large buyout houses joined the organization. The returns over ten years or since inception give a more accurate indication of the long-term trends, the BVCA said.
Other results of the survey:
- The overall long-term net return to investors since inception now stands at 17.3% p.a. on funds raised between 1980 and 2003, measured to 31 December 2007. This compares to the 16.0% since inception return in 2006 and is the third year of continued improvement.
- Venture and technology funds continue to face challenges with difficult exit markets and the overall performance numbers are still impacted by the distorting effect of the technology bubble period and the subsequent deep downturn.
- Improved performance continues for funds raised in 1999 and 2000 and early millennium vintages are also showing strong returns.
Meanwhile FT Alphaville reports on a study by the CFA Institute, indicating that three quarters of hedge fund managers think the outlook for computer-driven strategies is troubled.
“The survey’s findings do reflect part of the long-held view that quant strategies have had their day. If pre-crunch those strategies were plagued by diminishing returns and a crowded marketplace, post-crunch they’ve been plagued by big losses, investor withdrawals and a few spectacular collapses.”
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