Venture Capital & Growth Drive Private Equity’s Historic Outperformance

10-Year Rolling Returns

This week’s chart highlights the 10-year rolling performance of private equity strategies and the MSCI World Index, showcasing how venture capital and growth equity?funds have produced stellar returns for much of the past decade. While there has been considerable focus on post-2021 venture performance, private markets are a long-term asset class. Despite recent declines, both venture capital and growth equity continue to outpace other strategies and demonstrate the potential to consistently drive outsized returns relative to public equities over the long term. Regardless of macro volatility and market cycles, venture and growth continue to generate premium historical returns that investors cannot access from listed equities.

Private equity?portfolios without venture and growth strategies may experience higher tracking errors to private equity benchmarks. While venture capital’s greater dispersion of returns across market cycles offers substantial long-term return potential, we underscore the importance of prudent portfolio construction?and best-in-class manager selection for LPs to secure the best potential risk-adjusted returns for the asset class.

Catch up on Chart of the Week.

Definitions

Corporate Finance/Buyout: Any PM fund that generally takes control position by buying a company.

Growth Equity: Any PM fund that focuses on providing growth capital through an equity investment.

Venture Capital: Venture Capital incudes any PM fund focused on any stages of venture capital investing, including seed, early-stage, mid-stage, and late-stage investments.

MSCI World Index: The MSCI World Index tracks large and mid-cap equity performance in developed market countries.