Benchmarking private equity fund performance is a notoriously slippery effort, with a variety of data providers, including Thomson Reuters, publisher of peHUB, generating results that can be widely divergent from one another.
The newest player, poised to enter the game later this month, is The Burgiss Group of Hoboken, NJ, a software developer and consultant to the alternative investment market. The company plans a Good Friday launch of an online benchmarking service, Private iQ, with data on 3,000 funds current through the end of 2010.
(Have you tried it? If so, please let us know what you think of it in comments below.)
At $17,250 a year for five users, the service—which the firm describes as a “decision suport and benchmarking solution”—isn’t cheap. And it doesn’t provide information on specific funds that an investor may be interested in. But it allows users to check aggregate fund performance across a variety of metrics, with real-time analytics. According to James Bachman, the Burgiss Group’s director of research, the April 22 commercial rollout represents the one-year anniversary of the beta’s launch.
The database—comprising venture capital, buyout funds, funds of funds, and real estate funds that collectively raised more than $2 trillion in capital since 1978—has been in beta testing with the 60-plus LPs that supplied the data. Many of those LPs are clients of Burgiss Group’s popular portfolio management software, Private i.
A number of existing providers already deliver fund performance benchmarking data, including Cambridge Associates, Preqin, State Street Corp. and, as mentioned, Thomson Reuters, through a product called Thomson ONE Banker. A company called AARM Corp. also appears to have something fresh percolating on this front up in Lexington, Mass.
None so far has been able to produce a standard benchmarking product that is widely considered to be complete and definitive. Private iQ could be a game-changer, with its vast database, granular controls and simple, real-time interface. Data comes from the LPs, reducing the possibility that the data could be corrupted by survivorship bias, in which general partners no longer proud of their performance stop providing their data to a service.
The question is whether it will become a standard by which investors can measure fund performance, or whether it will exacerbate the industry’s Lake Wobegon problem, letting fund managers manipulate their peer group so that all the children are above average.
You can learn more about the features of Private iQ at its Web site. Have your tried it? Do you think it will become the industry standard? We want to hear from you. Please weigh in with comments below and we may highlight them in a future piece.