Has Private Equity Outperformed Public Equity?
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A central question for investors considering an allocation to private capital is how its expected returns compare with those of more liquid public investments. Determining whether private equity has outperformed public equity requires not only measuring returns, but constructing a suitable public benchmark that accurately reflects the characteristics of private-market investments. This comparison must account for factors such as industry composition, geographic exposure, company size and leverage — elements that can significantly affect relative performance.
We present a comprehensive analysis of private-equity performance relative to customized public-equity indexes designed to mirror the systematic attributes of private holdings. By leveraging an extended dataset spanning from 1994 through 2024, we evaluate the risk-adjusted returns of buyout and venture-capital strategies. Our results indicate that buyout funds have delivered annualized outperformance of approximately 3.8% and venture-capital funds around 2.0%, after accounting for fees and carried interest.
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