Private Equity funds performance over a longer period of time – i.e. 5Y, 10Y, 15Y, and 20Y years.
KKR in their mid-year report calculates Private Equity to return 11.9% p.a. in the next 5 years.
PitchBook data shows Private Equity to perform well over long-term horizons:
5Y returns / IRR – 17.85%
10Y – 15.13%
15Y – 11.58%
20Y – 14.24%
If we compare these returns with the S&P 500 index, investors are getting around 2.5 – 4% p.a. (depending on the investment horizon) higher returns for taking illiquid investments for 5-10 years.
Yet, the true beauty in Private Equity is being able to get access to top managers or top quartile funds. The return difference between the median fund and top quartile funds is around 5-8% p.a., which is a lot if compounded over the years.
Source: PitchBook
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