Those are the latest findings from Cambridge Associates, which reported today that its U.S. Private Equity Index returned 3.6% in the third quarter, compared to -0.1% in the prior quarter. Cambridge’s U.S. Venture Capital Index, meanwhile, gained 0.6% in Q3, the same as in the prior quarter.
Private equity funds launched in 2007 comprised the largest group in the PE index, representing more than one-fourth of its value. That vintage year also had the highest return of the top five for the third quarter: 4.5%. Most of the gains in the 2007 funds were due to increased valuations for energy companies, though write-ups in healthcare and manufacturing also contributed. The second largest group of funds in the PE index was the 2006 vintage, which represented 23.4% of the index’s value and earned 3.8% for the period.
The venture capital benchmark, by contrast, has become more diversified by vintage year, but remains tightly concentrated by sector. The three largest sectors — IT, healthcare, and software — comprised almost three-fourths of the index’s total value. Of those, both healthcare and software investments posted positive returns, while IT dipped a bit.
Overall, it’s a climate where firms are returning more to investors than they’re calling down. Fund managers in the private equity index called $16.7 billion from investors in the third quarter and distributed $21.6 billion. Venture capital fund managers called $3.2 billion in the third quarter and distributed $5.9 billion, the highest level of quarterly distributions for the VC benchmark since the first quarter of 2001.
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