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Infographic: Is Your Fund In The Dreaded Bottom-Quartile?

All the talk of a pending buyout shakeout this week on peHUB coincides nicely with the annual fund performance review by sister publication Buyouts Magazine.

Needless to say, managers of bottom-quartile funds have to be deemed most at risk for getting shaken out. And we’re making them easy to spot. The infographic below, derived from our performance database, dramatically illustrates, in brightly colored bands, the bottom-quartile range of IRRs for domestic buyout funds for vintage 1995 to 2006.

Is your vintage 2006 domestic buyout fund sporting a -0.6 percent IRR or worse? Sorry, but that puts you into the bottom quartile for that vintage, which took a big hit from the financial crisis of 2008 and subsequent recession. (By the same token, a 9.3 percent IRR or better gets you a golden ticket into the top quartile.

The 2002 and 2003 vintage domestic buyout funds, benefiting from a rising economy in the wake of the dot-com crash, performed particularly well, according to our database. Generating anything less than a 10.1 percent IRR for a vintage 2002 fund, or a 13.4 percent IRR for a vintage 2003 fund, puts you in the bottom quartile. On the other hand, score a 34.6 percent IRR or better on a 2002 fund or a 31.6 percent IRR or better on a 2003 fund and you’re into the top quartile.

Altogether this year, Buyouts Magazine collected return data on some 518 domestic buyout funds from nearly two dozen public pension funds and other limited partners that disclose their returns on their Web sites, or through freedom-of-information-act requests. Funds that invest around the world, including the United States, were included in the domestic buyout fund category if the fund manager has its headquarters in the United States. Funds invested entirely outside the United States, however, are not included. Not all funds in our database suppled IRRs; much of the data is current through March 31 of this year and none is older than year-end 2010.

David M. Toll is editor-in-charge of Buyouts Magazine. Follow him on Twitter @davidmtoll. Follow @Buyouts.