Buyout Funds 1 Year Performance Fell to 23.6%; VC Funds Return 10.8%

Private equity performance was extremely steady with both buyout and venture capital asset classes continued to outperform both the S&P 500 and NASDAQ markets in the long term, according to Thomson Financial and the National Venture Capital Association (NVCA). 

Venture Capital Funds:

For venture capital firms, short term performance showed a slight decrease with the one year venture capital returns posting a 10.8% return for Q3 2006, down from 13.7% in Q2 2006. 

  • Five year returns continued to improve and inch towards positive territory at -1.0% in Q3 2006, up from -3.7% in Q2 2006. This negative return continues to reflect the aftermath of the Internet bubble burst. 
  • Ten and twenty year returns remained steady at 20.5% and 16.5% respectively.

Buyout Funds:

One year buyout returns saw a very slight decrease as well, posting 23.6% for Q3 2006 compared to 26.2% for Q2 2006. 

Ten and twenty year buyout returns were relatively steady at 8.8% and 13.2% respectively.

Funds less than $500 million in size posted an aggregated 37.2% one year return in the quarter.

Thomson Financials' US Private Equity Performance Index (PEPI)
Investment Horizon Performance through 09/30/2006

Fund Type

1 Yr

3 Yr

5 Yr

10 Yr

20 Yr

 Early/Seed VC

2.90

5.50

-5.40

38.30

20.50

 Balanced VC

10.70

12.80

1.80

16.80

14.60

 Later Stage VC

27.80

10.50

2.70

9.40

13.90

All Venture

10.80

9.40

-1.00

20.50

16.50

 Small Buyouts

11.30

9.40

5.00

6.00

25.20

 Med Buyouts

37.20

12.30

6.10

10.90

15.30

 Large Buyouts

23.10

16.40

8.30

8.30

12.40

 Mega Buyouts

23.40

16.20

10.10

8.90

11.60

All Buyouts

23.60

15.60

9.20

8.80

13.20

 Mezzanine

-8.10

4.70

2.90

5.90

8.40

All Private Equity

19.00

13.20

5.90

11.20

14.00

NASDAQ

5.50

7.80

8.70

7.10

11.40

S & P 500

9.70

9.90

5.20

7.50

9.70

Source: Thomson Financial/National Venture Capital Association 

* The Private Equity Performance Index is based on the latest quarterly statistics from Thomson Financials' Private Equity Performance Database analyzing the cashflows and returns for over 1860 US venture capital and private equity partnerships with a capitalization of $678 billion. Sources are financial documents and schedules from Limited Partners investors and General Partners. All returns are calculated by Thomson Financial from the underlying financial cashflows. Returns are net to investors after management fees and carried interest. Buyout funds sizes are defined as the following: Small: 0-250 $Mil, Medium: 250-500 $Mil, Large: 500-1000 $Mil, Mega: 1 Bil +

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