Why betting on private equity delivering alpha over itself makes sense

Buying the market – via a low-cost strategy – is starting to look surprisingly attractive for certain investors.

By Adam Le

Private equity is an asset class that purports to offer alpha over public markets. Increasingly, it appears there’s a way to access PE performance that delivers alpha over the asset class itself.

According to research by investment firm NewVest , which we reported this week has raised its third fund to invest in private equity via a passive index-style strategy, pooled returns outperform median returns in PE. Private equity funds have a right-skewed distribution – meaning that the mean, or average, is greater than the median return.

NewVest estimates pooled returns have delivered 310 basis points above average median private equity net returns on an IRR basis for 2000-2017 vintages. On a total value to paid-in basis, the outperformance...

Read the full commentary piece here .