RT Journal Article
SR Electronic
T1 Practitioner's Guide to Private Equity Benchmarking
JF The Journal of Alternative Investments
FD Institutional Investor Journals
SP 81
OP 94
DO 10.3905/jai.2004.461460
VO 7
IS 3
A1 Andr Frei
A1 Michael Studer
YR 2004
UL https://pm-research.com/content/7/3/81.abstract
AB Benchmarking private equity investments with public market benchmarks is difficult because of the specific characteristics of private equity. In this article, various benchmarking methods that aim to draw the practitioners' attention to the subtleties of comparing private equity performance with public markets are discussed. The authors elaborate that the requirement of a specific robustness criterion reduces the number of suitable benchmarking methodologies. They conclude that the static spread method (widely used for fixed income investments, but generally unknown in the context of private equity investments) represents the most meaningful methodology. Benchmarking historical private equity data with the static spread method reveals that private equity outperformed public equity markets by around 5%.