“Top Quartile” Means Nothing

If you’re not calling your fund top quartile, you aren’t fudging the numbers enough. According to a study picked up by Private Equity Online, 77% of funds could claim their performance places them in the top 25% of private equity funds. If the math on that sounds a little screwy, that’s because it is.

According to data from Peracs, 77% of private equity funds can claim top-quartile status if they manipulate their vintage year when applying it to benchmark data. So the funds aren’t lying about their performance. They’re just manipulating the benchmark criteria. Meaning, anyone who doesn’t say they’re in the top quartile must really be in that bottom 23%. Either way, as we’re reminded once again, it’s a meaningless term.

So can we finally agree to stop bragging about “top quartile” funds now?