New research has concluded that the private equity asset class beats public equities as well as offering an attractive risk profile.
The research, conducted by Partners Group, notes a common prejudice that private equity’s superior performance is attributed to the higher risk taken by private equity investors. Under this belief, the asset class is seen as an unattractive form of investment during difficult macroeconomic environments. The new research finds that these beliefs are not justified.
According to Partners Group, private equity investments beat public equities and offer an attractive risk profile, especially in challenging environments. Since 2000, private equity investments have outperformed the respective public equity indices by five per cent in the US and nine per cent in Europe each year.
In the aftermath of the internet bubble, private equity investment outperformed public markets by six per cent in the US and 20 per cent in Europe on a yearly basis.
During the financial crisis from the third quarter in 2007 to the beginning of 2008, private equity investments beat public market indices by 19 per cent in both the US and Europe on a yearly basis.
These results show that the asset class is more attractive in times of economic uncertainty, according to Partners Group.
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