Private Equity Cambridge Associates benchmarking | Wall Street Financier: Notes from High Altitude© https://wallstreetdealmaker.com He who makes a beast out of himself gets rid of the pain of being a man. Sat, 11 Feb 2017 21:09:00 +0000 en-US hourly 1 https://i0.wp.com/wallstreetdealmaker.com/wp-content/uploads/2018/12/pitbullgif.gif?fit=32%2C22&ssl=1 Private Equity Cambridge Associates benchmarking | Wall Street Financier: Notes from High Altitude© https://wallstreetdealmaker.com 32 32 155119938 New Benchmarks for Private Equity Performance https://wallstreetdealmaker.com/2017/02/new-benchmarks-for-private-equity-performance/ https://wallstreetdealmaker.com/2017/02/new-benchmarks-for-private-equity-performance/#respond Sat, 11 Feb 2017 21:09:00 +0000 http://wallstreetdealmaker.com/index.php/2017/02/11/new-benchmarks-for-private-equity-performance/ This month Cambridge Associates (CA) introduced some nuanced Investment-Level Benchmark by vintage years, Gross/Net IRR quartiles and sector analysis. CA is also making a breakdown between “Gross IRRs” and “Net IRRs”looking for the lowest “fee drag”. CA is gauging the effect of fees on LP returns: ” fund-level fees cost … Continue ReadingNew Benchmarks for Private Equity Performance

The post New Benchmarks for Private Equity Performance first appeared on Wall Street Financier: Notes from High Altitude©.]]> This month Cambridge Associates (CA) introduced some nuanced Investment-Level Benchmark by vintage years, Gross/Net IRR quartiles and sector analysis. CA is also making a breakdown between “Gross IRRs” and “Net IRRs”looking for the lowest “fee drag”.

CA is gauging the effect of fees on LP returns:

” fund-level fees cost private equity investors 616 basis points (bps) (on average), or about 0.2x MOIC over the life of a fund. Of course, the effect of carried interest can increase the fee drag significantly in better-performing funds and stronger vintage years. For example, for the five best-performing private equity vintages across 1986–2010, the average net to LP returns are a healthy 26.1% IRR and, as a result, the average gross-to-net spread is a hefty 959 bps per year. Expensive for sure, but a price most investors are quite happy to pay for such robust net returns.”

Source: Cambridge Associate, A New Arrow in the Quiver: Investment-Level Benchmarks for Private Investment Performance Measurement

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