Better News From Private Equity LPs

Competing against a rising tide of public equities is tough (rising, at least until recently). But private equity LPs aren’t dismayed by the performance they are seeing.

The majority feels the performance of PE investments has met or exceeded expectations, according to a new study of private equity, hedge fund, real estate and infrastructure fund investors by Preqin.

In particular private equity investors who say performance has exceeded expectations has reached a high of 18%, the study found. Eighteen percent may not seem like a large number. But remember the Dow’s year-to-date gain is about 14%. And a year ago, the sentiment that PE was exceeding expectations was at 9%.

In comparison, hedge fund and real estate investors look like a more chasten lot. Roughly a quarter of these LPs view the asset classes as falling short of expectations.

The greater satisfaction with PE could translate into more welcoming meetings with LPs. Forty-five percent of private equity LPs say they are below their target allocations for the asset class. Forty-one percent of hedge fund investors say they are.

Preqin said it interviewed 450 investors from June to August to gather the data for its study. “Over 80% of investors interviewed in each asset class expect to commit the same or more capital to their respective asset class in the next 12 months,” the study found.

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