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European private equity outperforms emerging markets

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A new study, by Cambridge Associates, indicates that funds in developed markets excluding the US, namely Western Europe, Australia, Canada, Israel, Japan and New Zealand, generated “solid returns”, aided by a weakened US dollar that helped to boost foreign currency returns.

Funds in developed markets outside the US, of which 64 per cent was invested in European companies, produced returns of 6.7 per cent in Q2, more than doubling the 3.2 per cent rise of the emerging markets benchmark. 

The 2004 vintage year funds generated the period’s highest returns for developed markets and emerging markets indices, earning 9.4 per cent and 6.6 per cent respectively. Media companies were the biggest driver of returns for the 2004 in developed markets, while the IT sector was the main contributor to returns in the emerging markets index. 

“While ex-US developed markets have bested emerging markets in the first half of 2011, we expect the worsening situation in Europe to have a significantly negative impact [later in the year],” says Ralph Jaeger, senior research consultant and co-head of international private equity and venture capital research at Cambridge Associates.

Read more from our sister title Real Deals.

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