TY - JOUR T1 - Fee Levels, Performance, and Alignment of Interests in Private Equity JF - The Journal of Alternative Investments SP - 95 LP - 135 DO - 10.3905/jai.2015.17.4.095 VL - 17 IS - 4 AU - Cyril Demaria Y1 - 2015/03/31 UR - https://pm-research.com/content/17/4/95.abstract N2 - In this article, 20 years of data provide grounds for the analysis of private equity fund (PEF) performances. Gross returns for U.S. and Europe, the Middle East, and Africa (EMEA) PEFs are modeled and benchmarked with total market indexes (TMI) using an adjusted public market equivalent (PME+) – distributed to paid-in ratio (DPI) method. Average U.S. funds perform in line with benchmarks. Carried interest has no material impact on a PEF’s relative performance to the index. Top-quartile funds exhibit an outperformance (net and gross basis). Timing of cash flows explains part of it. More than management fees, the level of the preferred return rate might reduce alignments of interests; calculating a spread with PME+ – DPI index and sharing the resulting alpha might increase it.TOPICS: Private equity, global, performance measurement ER -